After Health-Care Vote: U.S. Stocks Slide, Tech Shares Drop

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Major U.S. stock records fell Thursday, as technology shares plunged again.

Losses hastened in afternoon trading, sending the Dow Jones Industrial Average down more than 250 points before the index cut losses toward the end of the session.

Many investors said they see few ideas to extend bets on stocks that are previously trading near all-time highs. New economic data, especially inflation, have been middling, prospects for policy changes like tax cuts and fiscal stimulus have been strengthened and second-quarter earnings season has yet to begin in earnest.

Central banks around the world have also suggested that they will push for a normalisation of monetary policy, sending yields on government bonds higher.

“There’s a lot of complacencies out there,” said Tom Stringfellow, president of Frost Investment Advisors. With stocks already trading near where many analysts expect them to finish the year, further pullbacks wouldn’t be surprising, he added.

At the same point, selloffs have been comparatively short-lived, telling investors don’t want to miss out on a stock that has been rising. The Dow Jones Industrial Average is on track to grow for seven continuous quarters.

The blue-chip record fell 167.58 points, or 0.8%, to 21287.03 on Thursday and the S&P 500 lost 20.99 points, or 0.9%, to 2419.70 — their highest one-day declines in more than a month. The Nasdaq Composite fell 90.06 points, or 1.4%, to 6144.35.

As stocks swung, the CBOE Volatility Index rose 14% to 11.44. The VIX, which measures investors’ expectations for swings in the S&P 500 over the next 30 days, usually moves inversely to stocks.

Tech shares led drops in the S&P 500, falling 1.8%. Google parent Alphabet fell $23.19, or 2.4%, to $937.82 and chip maker Nvidia shed 5.07, or 3.3%, to 146.68. The S&P 500 tech sector is up 17% this year but has fallen 2.6% in June as some investors have doubted whether the group’s run-up has been overdone.

Financial shares climbed, benefiting from a recent rise in Treasury yields, as well as the Federal Reserve’s resolution Wednesday to permit big U.S. banks to ramp up dividend payouts and share buybacks.

The KBW Nasdaq Bank Index of U.S. commercial lenders added 1.3%.

Hence, expectations of higher interest rates in Europe and the U.K. strengthened the euro and the pound, which were both up approximately 0.6% against the U.S. dollar.

The Stoxx Europe 600 fell 1.3%, with significant losses across sectors compensating gains in bank shares.

A raft of comments Wednesday by policymakers at the European Central Bank, the Bank of England and the Bank of Canada has persuaded many investors that the gradual end of monetary stimulus is coming.

The key test is if economic data and corporate profits come in high enough to justify financing costs going up, analysts said. While confidence from central bankers can give stocks a boost, higher rates can also make them look less engaging.

“What’s surprising is that equities continue to take it so well,” said Philippe Gijsels, chief strategy officer at BNP Paribas Fortis. “Markets have benefited enormously from the very loose monetary policy. It would be logical to assume that if this stops you’ll have an impact on markets.”

Recently, Japan’s Nikkei Stock Average rose up 0.4%, while Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 scored up 1.1% each.