S&P 500 reverses 0.7% gain as tech selloff outweighs jobs relief

The S&P 500 fell 0.2% to 7,483.23, reversing a 0.7% intraday gain, as technology stocks slumped despite softer-than-expected jobs data that initially fueled a rally across most sectors.

"The market initially rallied on the payrolls print, but the tech unwind that has defined June is far from over," said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. "Investors are using any strength to reduce exposure to the names that have run the furthest."

The Nasdaq Composite dropped 0.7% to 26,040.03, while the Dow Jones Industrial Average slipped less than 0.1% to 52,305.24. Three of every five S&P 500 stocks rose, but losses in heavyweight technology names dragged the benchmark lower. Micron Technology plunged 10.6%, Advanced Micro Devices fell 6.9% and Nvidia lost 1.3%. On the upside, General Mills jumped 8.5% after reporting better-than-expected quarterly results and announcing a $3 billion cost-cutting plan, while Nike gained 4.9% on stronger earnings.

The reversal marks the S&P 500's eighth decline in 11 sessions, leaving it 1.7% below its June record close of 7,609.78. The 50-day moving average near 7,385 is the next key support level, with traders watching for a potential test if the tech selloff deepens.

The selloff in tech names extended a rotation that has gathered pace since mid-June, as investors reassess valuations in the sector that powered the first-half rally. Micron's 10.6% drop led semiconductor losses after the chipmaker's outlook disappointed, while AMD and Nvidia followed. The Philadelphia Semiconductor Index fell 3.2%, its biggest one-day drop in three weeks.

Treasury yields provided some relief, with the 10-year note falling to 4.47% after touching 4.50% earlier in the session. The pullback followed an Institute for Supply Management report showing U.S. manufacturing grew at a slower pace than economists expected, with price increases also moderating. That data, combined with the softer jobs print, reduced expectations that the Federal Reserve would need to raise interest rates multiple times this year. The yield on the two-year note, more sensitive to monetary policy expectations, fell 6 basis points to 4.12%.

Gold rose 1.1% to $4,082.40 an ounce, recovering from an overnight dip below $3,980, as lower real yields boosted the precious metal. Brent crude fell 1.9% to $71.57 a barrel, extending its decline on hopes that the U.S.-Iran conflict may ease and reopen the Strait of Hormuz to oil tankers. The U.S. dollar index edged lower, adding to the positive tone in commodities.

The S&P 500's first-half gain of about 9.5% and its best quarterly performance since mid-2020 — a 14% surge in the second quarter — have left the index vulnerable to profit-taking. Corporate earnings remain supportive, with first-quarter profits growing about 28% year over year and 85% of companies beating estimates, according to compiled data. But with more than $200 billion of new equity supply competing for capital and midterm election years historically the weakest of the four-year cycle, some strategists expect a pullback into the autumn that could cool elevated positioning without breaking the earnings story.

This article is for informational purposes only and does not constitute investment advice.