AVGO Broadcom Inc

By Ben St. Clair and Amrith Ramkumar 

Weakness in technology shares hurt U.S. stocks for the second straight session Thursday, with worries about regulation and trade continuing to hang over the market's best-performing sector.

The tech-heavy Nasdaq Composite fell 0.9%, while the S&P 500 shed 0.5%. The Dow Jones Industrial Average declined 29 points, or 0.1%, to 25947. Major indexes had fallen in three of the previous four sessions entering Thursday, though they remain near record levels.

Semiconductor stocks dragged the sector lower Thursday, with Micron Technology shares slumping 10% after Baird analysts lowered their price target on the stock. Lam Research and Applied Materials were also among the S&P 500's worst performers.

Chip makers have been buffeted by trade developments throughout the year because of their reliance on global commerce, particularly through China. While their shares recovered last month, some analysts expect swings to continue as trade discussions roll on.

More broadly, some investors predict that the volatility that has engulfed stocks around the world will spread to the U.S. if the trade fight with China continues to escalate.

The possibility of additional tariffs "doesn't seem particularly priced into U.S. markets," said Clark Fenton, managing partner and chief investment officer at Agilis Investment Management.

Investors are waiting to see if the Trump administration will move ahead with tariffs on an additional $200 billion of Chinese goods.

Weakness in internet stocks also continued Thursday, after Facebook and Twitter executives testified before Congress a day earlier about election interference on their platforms. Twitter, Facebook and Google parent Alphabet were all down at least 2.5%, while Amazon.com dropped 1.5%.

Despite recent volatility, some analysts expect consistent revenue growth to keep technology stocks as the market's leader. Dell Technologies boosted its full-year sales guidance after reporting a nearly 20% increase in total net revenue for the most recent quarter. Shares were little changed.

Broadcom is slated to report earnings after the market closes Thursday.

Moves in most other sectors were muted, with analysts looking ahead to Friday's jobs report for the latest reading on the U.S. economy.

Data on Thursday showed the number of Americans filing applications for new unemployment benefits fell at the end of August to a nearly five-decade low, while U.S. worker productivity rose this spring at the best pace in more than three years.

Consistent U.S. economic figures have supported major indexes this year in the face of continuing trade disputes with China and Canada. At the same time, investors have said growth hasn't accelerated so quickly that the Federal Reserve will have to quicken its pace of interest-rate increases, keeping the backdrop favorable for U.S. stocks.

While assets more tied to global growth including commodities and emerging markets have wobbled, some analysts expect the U.S. to remain a favored region.

"In the short term, [trade is] not necessarily a huge story for the U.S.," said Jonas Goltermann, an economist at ING. "It's much worse for the Chinese."

The yield on the 10-year U.S. Treasury note fell to 2.880%, according to Tradeweb, from 2.902%. Yields fall as prices rise.

The dollar weakened for the second straight session, lifting beaten-down commodities by making them cheaper for overseas buyers. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, dropped 0.2%.

Elsewhere, the Stoxx Europe 600 was down 0.4% after closing Wednesday at its lowest mark since April.

Stocks in Asia continued to fall, with Hong Kong's Hang Seng shedding 1% and the Shanghai Composite down 0.5%. Japan's Nikkei Stock Average declined for the fifth straight session, closing down 0.4%.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

September 06, 2018 11:49 ET (15:49 GMT)

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