Tech Heavyweights Pull U.S. Stocks Down

By Gunjan Banerji and Anna Isaac

Shares of technology heavyweights dragged U.S. stocks lower Friday, putting them on track for weekly declines.

The S&P 500 ticked down about 0.9%. The Dow Jones Industrial Average lost roughly 190 points, or 0.7%. The tech-heavy Nasdaq Composite shed 1.3%.

The week has been marked by big swings among shares of individual companies and a rotation between some of the market's recent winners and losers. The information technology sector -- one of the market's biggest winners this year -- was one of the biggest laggards of the S&P 500's 11 sectors in trading Friday.

Shares of some tech heavyweights and momentum-driven stocks faltered. Facebook and Apple are on track to fall more than 4% this week, underperforming the broader market. Tesla has shed about 5% this week.

Shares of Intel fell 16% Friday. The chip maker reported stronger earnings in the second quarter after Thursday's market close, but also signaled a delay to its development of superfast chips.

"The concentration of the S&P 500 among the tech names is adding to the momentum downward," said Amy Kong, chief investment officer of Barrett Asset Management. "Momentum definitely builds to the upside and it also builds to the downside."

The five largest stocks in the index -- Apple, Microsoft, Amazon.com, Google-parent Alphabet and Facebook -- recently made up about a quarter of the index, the highest proportion in at least 30 years, according to Goldman Sachs analysts.

Investors will be keeping a close eye on tech earnings releases over the next week, with Amazon.com and Alphabet reporting their financial results.

Investors flocked to these companies, which they viewed as relatively shielded from the pandemic's economic damage. If they falter after earnings, that poses a threat to the broader stock market given their outsize influence on the S&P 500.

Anxiety about the coronavirus pandemic and geopolitical tensions around the globe were evident in the market for gold, with prices surging toward all-time highs.

Also hanging in the backdrop is rising tension between Washington and Beijing that threatens to cloud prospects for trade between the world's two largest economies.

China on Friday ordered the closure of the U.S. consulate in Chengdu, a city in the southwestern part of the nation, in a tit-for-tat retaliation against Washington's decision to shut down the Chinese consulate in Houston. The closures mark another step in the deterioration of relations between the two nations, which have clashed over trade, technology, handling of the coronavirus pandemic and global influence.

China's major stocks benchmark, the Shanghai Composite Index, fell 3.9% by the close of trading, capping off a second consecutive week of declines. Hong Kong's Hang Seng Index retreated 2.2%.

"Today's act by China is seen as an actual political retaliation, as opposed to the typical verbal scuffles that had been going on," said Ong Zi Yang, senior macro analyst at FSMOne.com in Singapore. "The escalation in geopolitical tensions has encouraged varying degrees of profit-taking among investors, especially as Chinese equities have rallied quite significantly since the global equities sell-down in March."

U.S. stocks have also been sensitive this week to cues on whether lawmakers will have a new stimulus bill hammered out before their summer break in August.

"The road toward an agreement is expected to be bumpy, so markets are taking a breather," said Geoff Yu, senior markets strategist BNY Mellon. "It's important to avoid a sense of a cliff in household expectations. That would be a problem for the U.S. and the rest of the world as well."

--Chong Koh Ping contributed to this article.

Write to Gunjan Banerji at [e-mail] and Anna Isaac at [e-mail]