Tech shares drop, reversing rally, leading stock market down

Last Updated Jun 29, 2017 4:56 PM EDT

Technology companies led a slide in U.S. stocks Thursday as the market gave up some of its gains from the day before. Utilities, real estate companies and other high-dividend stocks also fell as bond yields rose.   

Banks were up the most after the Federal Reserve said they can buy back more stock and raise their dividends. Energy stocks also rose as oil prices headed higher.

The Standard & Poor's 500 index fell 21 points, or 0.86 percent, to 2,420. Its tech components fell 1.8 percent. The tech-heavy Nasdaq composite lost 90 points, or 1.44 percent, to 6,144. The Dow Jones industrial average slid 168 points, or 0.78 percent, to 21,287. The Russell 2000 index of small-company stocks gave up 9 points, or 0.64 percent, to 1,416. The stock market was coming off its biggest gain in two months.

The blah debut of Blue Apron Holdings (APRN) underscored the day's problems. The meal-delivery service, which cut its offering price the day before, opened at $10 and almost hit $11, before falling back below its start price, to $9.97. Questions about its business model -- the company has had trouble keeping customers, for whom the novelty wears off -- has been a major concern of analysts. Unlike many tech public offerings these days, Blue Apron remains deeply unprofitable, as its federal filing shows.

 "European shares were down and that's certainly giving a little bit of pause for concern," said Eric Wiegand, a senior portfolio manager with Private Wealth Management at U.S. Bank. "Investors, ourselves included, are anxious to get into earnings season a couple of weeks from now."

This all came amid some relatively good news: The U.S. Commerce Department said that the nation's gross domestic product, the broadest measure of economic health, increased at an annual rate of 1.4 percent in the first quarter. That's better than the previous estimate of 1.2 percent and double the initial estimate of 0.7 percent. The upgrade reflects new-found strength in consumer spending and exports. Still, it is below the 2.1 percent average logged since the recession ended in 2009.

Cisco Systems (CSCO) was down 2.09 percent after the seller of routers, switches, software and services lowered its earnings and revenue forecasts for the next few years. The stock gave up 67 cents to $31.41.

Financial sector stocks surged -- for instance, Citigroup (C) was up $1.80, or 2.76 percent, to $66.98 -- after the Federal Reserve said 34 of the biggest U.S. banks can buy back more stock and raise their dividends because their balance sheets are strong enough to bear a major downturn in the economy. The Fed's announcement Wednesday afternoon marks the first time that all of the banks have passed their so-called stress tests, which were created after the global financial crisis of 2008.

Meanwhile, bond prices fell. The 10-year Treasury yield rose to 2.27 percent from 2.23 percent late Wednesday.  Bond prices and yields move in opposite directions.