Tech firms drag stocks lower

Technology companies have suffered a second day of sharp losses.

US stock indexes have slipped again as technology companies, which were near record highs last week, suffered a second day of sharp losses.

Investors are changing course and selling some of the best-performing stocks of the year while buying companies that have struggled.

Technology companies have surged in recent months, and on Monday almost all of the losses came from the big companies that have led the way recently: Apple, Microsoft, Facebook, and Alphabet, Google's parent company.

Stocks fell hard in early trading, but gradually recovered part of their losses as the day went on.

Julian Emanuel, an equity strategist for UBS, thinks technology stocks may fall a lot further and wind up 10% lower than they were last week.

He said the technology companies should continue to do well, but the stocks have done so much better than the rest of the market in recent months that they are due for a downturn.

"Any time that you have that degree of extreme sector out-performance, two things happen: the overall market tends to get a bit more volatile, and the leading group tends to under-perform the laggards," he said.

Investors took a new look at some groups of companies that have not done that well in 2017, including energy, telecommunications and real estate companies. Some of the best-performing stocks fell, including consumer-focused companies, health care companies, utilities and basic materials makers.

The Standard & Poor's 500 index dipped 2.38 points, or 0.1%, to 2,429.39. The Dow Jones industrial average, which closed at a record high Friday, lost 36.30 points, or 0.2%, to 21,235.67.

The Nasdaq composite dropped 32.45 points, or 0.5%, to 6,175.46. The Russell 2000 index of small-company stocks slid 2.50 points, or 0.2%, to 1,419.21.

Apple shed 3.66 dollars, or 2.5% to 145.32 dollars while Alphabet lost 8.31 dollars to 961.81 dollars. Facebook fell 1.16 dollars to 148.44 dollars while Microsoft sank 54 cents to 69.78 dollars. Other 2017 top performers like Activision Blizzard, Netflix and Skyworks Solutions also tumbled.

Technology stocks have done far better than the rest of the market this year and were close to all-time highs before Friday's drop. The technology component of the S&P 500 index shed 2.7 percent Friday, which erased a month's worth of gains.

The Federal Reserve will meet Tuesday and Wednesday, and investors expect the central bank to raise interest rates for the third time since December.

Mr Emanuel, of UBS, said that if the Fed takes an upbeat view of the economy, investors will likely keep selling technology stocks and put their money into consumer-focused companies, banks, and other industries that should benefit from continued economic growth. But if the Fed is more pessimistic, investors may look for yield and safer investments and buy bonds and high-dividend stocks instead.

The dollar fell to 109.79 yen from 110.20 yen. The euro inched up to 1.1208 dollars from 1.1195 dollars. The British pound continued to fall. It slid to 1.2657 dollars from 1.12724 dollars following the UK's general election.

European stocks also stumbled. France's CAC 40 dropped 1.1% and the Germany DAX shed 1%. Britain's FTSE 100 lost 0.2%. The benchmark Nikkei 225 in Japan slipped 0.5% and South Korea's Kospi declined 1%. The Hang Seng of Hong Kong lost 1.3%.

-AP