Once again, a sell-off in tech stocks acted as a trigger for broader market losses on Tuesday. Sector heavyweights suffered reverses due to disparate concerns. But financials also declined after Treasury yields plummeted leading to broad losses for the bourses. And it is widely believed that the rout in tech stocks, which is likely to continue, was responsible for this turn of events as well.
Predictably, defensive stocks have caught investors’ fancy in the interim. These stocks can help shore up hard-earned profits during difficult market conditions. Further, they offer appreciably higher dividend yields. Adding stocks from the utilities, telecom and real estate domains to your portfolios looks like a prudent option at this point.
Tech’s Decline Leads to Market Rout
On Tuesday, shares of Apple Inc. (AAPL – Free Report) and Amazon.com, Inc. (AMZN- Free Report) declined 2.6% and 3.8%, respectively, leading to a 2.9% decline for the Nasdaq which suffered its sharpest one-day reverse since early February. Further, the Technology Select Sector SPDR (XLK) lost 3.2% even as Microsoft emerged as the worst performer for the Dow, losing a whopping 4.6%.
The initial trigger for last week’s tech losses, a reversal in Facebook Inc.’s (FB – Free Report) fortunes, remained very much in evidence. Shares of the social media giant lost 4.9% after Bank of America Merrill Lynch, the investment banking wing of Bank of America (BAC – Free Report) , lowered its price target for the stock for the second occasion in five days.
Even as Facebook continued to suffer from the fallout of the Cambridge Analytica scandal, a variety of self-driving related concerns felled NVIDIA Corporation (NVDA – Free Report) and Tesla, Inc. (TSLA – Free Report) .
Shares of NVIDIA lost 7.8% after the chipmaker put on hold all of its self-driving tests, according to Reuters. Meanwhile, Tesla’s shares declined 8.2% after the U.S. National Transportation Safety Board launched an investigation into a crash that occurred last week.