Three of the largest technology companies are set to report another quarter of blowout results after Tuesday’s closing bell, but the broader tech sector is having a shaky day amid a continued crackdown on Chinese technology stocks and extra pressure on riskier parts of the market.
The Technology Select Sector SPDR ETF
is off 2.2% in Tuesday trading, while the Nasdaq Composite Index
is down 2.3%. Meanwhile, the Dow Jones Industrial Average
is down 160 points, or 0.4%, and the S&P 500 index
is down 0.7%.
Among the Tuesday’s biggest losers in the world of tech are U.S.-listed shares of Chinese technology stocks given concerns about a crackdown on after-school tutoring services and companies in the country. Those fears are helping to drag down shares of Chinese tech companies more broadly, with U.S.-listed shares of Pinduoduo Inc.
off more than 11%. Shares of JD.com Inc.
and Alibaba Group Holding Ltd.
are each off more than 4%, building on declines from the prior two sessions.
“There is no doubt that the uncertainty surrounding the Fed’s next move, as well as disruptions caused by rising coronavirus cases and events in Asia, are forcing investors to cash out their profits before going on vacation this summer,” wrote Naeem Aslam, the chief market analyst at foreign-exchange brokerage AvaTrade.
The U.S. software sector is also showing pressure, with Workday Inc.
shares off 5.7%. A report from Business Insider indicated that Amazon.com Inc.
last year stopped its plans to use Workday on a companywide level, while Bernstein analyst Mark Moerdler wrote that there is “increased concern that Workday’s solution may not scale to meet the requirements of the largest companies in the world.”
Workday said in a blog post that it was “hyper-focused on meeting the needs of our customer community” but that some customers “have a unique set of needs that are different from what we’re delivering for our broader customer base,” hence a decision made “mutually” by Workday and Amazon to discontinue the deployment plans more than 18 months ago.
Other software stocks are down as well, though not by as much. Okta Inc.
shares are off 2.3%, while Zoom Video Communications Inc.’s
stock is down 2.7%.
Throughout tech, some of the biggest gainers from the past year are being hit hard, including Roku Inc.
off more than 6%, and Square Inc.
down more than 4%.
Chip names broadly are under pressure, with Micron Technology Inc.
and Western Digital Corp.
shares each down more than 4%. Intel Corp.
which gave an update late Monday on its roadmap, is seeing its stock down 3% in Tuesday’s session.
The weakness in tech comes as Apple Inc.
and Alphabet Inc.
are due to deliver June-quarter earnings reports after the bell, along with red-hot chip name Advanced Micro Devices Inc. While investors are anticipating another strong set of results across the board, there are questions about the sustainability of the tech boom as the companies face harder comparisons to year-ago periods in which they benefited strongly from the pandemic’s digital tailwinds.