US indices fall with tech-related shares

RATE FEARS:
Consumer sentiment dropped to its lowest since November last year, while investors worried that Fed policies would push the economy into recession

US stocks on Friday ended slightly lower, led by weaker megacap shares following their recent rally, as data showed that US consumer sentiment dropped to a six-month low.

The Dow Jones Industrial Average was barely lower in its fifth straight day of declines, the blue-chip index’s longest losing streak in two months.

Tesla Inc shares fell 2.3 percent after rising more than 2 percent on Thursday, when CEO Elon Musk announced that he had found a new chief executive for Twitter Inc.

On Friday he wrote on Twitter that the job went to former NBCUniversal Media LLC advertising chief Linda Yaccarino.

The S&P 500 technology sector was down 0.2 percent, while the consumer discretionary index fell 0.9 percent.

Shares of Apple Inc and Amazon.com Inc were among the biggest drags on the S&P 500, along with Tesla. The technology index is still up about 22 percent so far this year.

Photo: Reuters

“They’ve had an incredible run, so those valuation concerns are starting to manifest themselves,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“To their credit, they have strong balance sheets, they had decent first quarters, so their businesses seem to be holding up, but there comes a point where valuations do matter,” he said.

Consumer sentiment for this month dropped to its lowest since November last year as a standoff to raise the US government’s borrowing cap added to worries about the economic outlook.

Investors are concerned that the US Federal Reserve’s aggressive interest rate hikes could push the economy into recession.

Fed Governor Michelle Bowman on Friday said that the Fed would probably need to raise rates further if inflation stays high.

The Dow Jones Industrial Average fell 8.89 points, or 0.03 percent, to 33,300.62, the S&P 500 lost 6.54 points, or 0.16 percent, to 4,124.08 and the NASDAQ Composite dropped 43.76 points, or 0.35 percent, to 12,284.74.

S&P 500 utilities and consumer staples were the leading sectors, both rising 0.4 percent.

For the week, the Dow was down 1.11 percent, the S&P 500 fell 0.29 percent and the NASDAQ rose 0.4 percent.

The US Congressional Budget Office on Friday said that the US faces a “significant risk” of defaulting on payment obligations within the first two weeks of next month without a debt ceiling increase.