US stocks: Nasdaq drops as FAANG growth worries persist
Gains by energy companies, as oil prices rose, and bank stocks ahead of the Federal Reserve meeting helped the benchmark S&P 500 cut its losses.
The Nasdaq Composite fell more than 1 per cent on Monday for the third straight session, as disappointing forecasts from a clutch of technology and internet companies fueled worries about the continued growth of the high-flying tech sector.
The technology index tumbled 1.65 percent, falling more than 1.5 percent for the third straight day as underwhelming results from the likes of Facebook and Netflix spooked investors about the prospects of a sector that has led the equity market to record highs.
The so-called FAANG group fell on Monday. Facebook dropped 4.3 per cent and Netflix slid 4.6 per cent. Amazon declined 1.2 per cent and Alphabet dropped 1.5 per cent despite both reporting healthy results.
Apple, which is due to report earnings on Tuesday after the bell, fell 0.6 per cent.
"Investors are still trying to digest results from FAANG stocks last week, and trying to figure out if it's just another bump in the road or if something more meaningful is in play," said Cliff Hodge, director of investments for Cornerstone Wealth in Charlotte, North Carolina.
"People are worried these stocks won't hold up or will not continue to grow. They are looking at the big picture and wondering if we're getting later and later in the cycle and trying to decide if it's time to be more defensive."
Still, six of the 11 major S&P sectors were higher. The biggest boost to the market was from the energy sector's 0.63 per cent gain as oil prices rose with investors remaining cautious oversupply outlook.
At 11:29 a.m. EDT the Dow Jones Industrial Average was down 42.84 points, or 0.17 per cent, at 25,408.22, the S&P 500 was down 9.45 points, or 0.34 per cent, at 2,809.37 and the Nasdaq was down 82.14 points, or 1.06 per cent, at 7,655.28.
Still, declining issues outnumbered advancers for a 1.06-to-1 ratio on the Nasdaq. Advancing issues outnumbered decliners for a 1.34-to-1 ratio on the NYSE.
Caterpillar's shares were up 0.5 per cent, easing from higher gains before the bell when the heavy equipment maker reported a second-quarter profit that beat estimates and raised its full-year profit outlook.
The Fed is expected to keep rates unchanged and reaffirm outlook for further rate hikes. The market has almost fully priced in a September hike and is leaning towards a further move before the end of the year.
The warning also weighed on the shares of Hormel Foods, Sanderson Farms and Pilgrim's Pride, which fell between 0.3 and 2.3 percent.
The S&P index recorded 13 new 52-week highs and two new lows, while the Nasdaq recorded 22 new highs and 64 new lows.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)