US stocks fall as valuation worries weigh

The Dow and S&P 500 suffered their worst daily drops in about six weeks as tech stocks dragged down the markets. Fred Katayama reports.

NEW YORK (AFP) – Technology shares tumbled on Thursday (June 29) as Wall Street stocks joined the selloff on European bourses amid worries about monetary policy in major economies and high US equity valuations.

Shares of Apple, Facebook and Microsoft all fell about 1.5 per cent in a move analysts attributed to profit taking and portfolio rebalancing near the end of the second quarter.

But comments this week by the heads of the Bank of England and the European Central Bank signaling a potential shift away from easy money policies also were cited as a headwind for equities.

Adding to that are worries the market is due for a pullback after a series of records this year.

“The valuation is the deepest concern and this is a long time that we have not had a sharp correction,” said Hugh Johnson of Hugh Johnson Advisors.

The Dow Jones Industrial Average dropped 0.8 per cent to close at 21,287.03.

The broad-based S&P 500 shed 0.9 per cent to 2,419.72, while the tech-rich Nasdaq Composite Index slumped 1.4 per cent to 6,144.35.

Stocks were in negative territory the whole session, but closed well above their session lows.

While most sectors were in retreat, large banks benefited after announcing a spate of share buybacks and dividend hikes after passing Federal Reserve stress tests. Bank of America, Citigroup and Wells Fargo all gained more than 1.5 per cent.

Ride Aid plunged 26.5 per cent after it reached a deal to sell about half its stores to rival Walgreens Boots Alliance and spiked an earlier takeover proposal opposed by antitrust regulators. Walgreens shares rose 1.7 per cent.

Staples jumped 1.4 per cent on news it reached a deal to be acquired by Sycamore Partners for about US$6.9 billion (S$9.5 bilion).