Shares of technology companies fell as investors rotated out of some of the leading 2020 performers in the wake of second-quarter earnings reports.
"The fact that they ran up the earnings and just sold off shows how hard it is when these companies have such lofty earnings expectations," said Joe Kinahan, chief market strategist at brokerage TD Ameritrade.
Shares of Tesla fell sharply after the electric-car maker posted robust growth in quarterly earnings. Analysts at brokerage JPMorgan said the earnings growth was driven, in large part, by sales of regulatory credits rather than cars, as the pandemic sent a chill through the auto market.
Microsoft shares fell even after the software giant posted fiscal fourth-quarter earnings and sales ahead of Wall Street targets and projected quarterly revenue growth in line with analyst estimates. The slowdown in growth for Microsoft's cloud computing Azure business was among the concerns for investors, said analysts at brokerage Morgan Stanley, in a note to clients. One strategist said concerns that "The good part is that, particularly for the tech companies, I think they've been able to find some customers that may stick around," said Mr. Kinahan.
"If you're in the chip area or you're in the cloud business, you've had the opportunity to convert more onetime clients to more permanent clients. If you're using that tech, odds are you're going to continue to use that technology when you return to work."
Video-game maker Ubisoft Entertainment rose after the French gaming concern said "stay-at-home" orders boosted demand for video-games. The chief executive of Ubisoft vowed to overhaul its workplace culture following allegations of misconduct and inappropriate behavior that have led several senior executives to leave the company in recent weeks.
After the bell, shares of Intel fell after the chip maker said some of its advanced chip launches would be delayed. That boosted the shares or rival AMD.
Write to Rob Curran at rob.curran@dowjones.com
