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S&P Rises on Rebound in Technology Shares

Semiconductors led the tech sector higher, offsetting declines in energy shares as oil fell

By Amrith Ramkumar and Riva Gold
Updated July 5, 2017 5:49 p.m. ET
A rebound in technology shares boosted the S&P 500 on Wednesday.

The tech sector ended a three-session streak of declines and remains the best performer out of the 11 major groupings in the S&P 500 so far this year. The gains helped the Nasdaq Co mposite outperform its peers Wednesday.

The Nasdaq rose 40.80 points, or 0.7%, to 6150.86 after falling for three- straight trading days. The S&P 500 rose 3.53 points, or 0.1%, to 2432.54 and the Dow Jones Industrial Average declined 1.10 points, or less than 0.1%, to 21478.17.

Semiconductor stocks were some of the day’s biggest gainers after chip maker Nvidia announced an artificial-intelligence technology partnership with Chinese internet giant Baidu. On Monday, the Semiconductor Industry Association said world-wide chip sales grew 22.6% in May compared with the same month a year prior, the largest such increase since September 2010.

Advanced Micro Devices and Micron Technology were the S&P 500’s two best performers by percentage increase Wednesday. Advanced Micro Devices rose $1.04, or 8.6%, to $13.19, while Micron gained 1.37, or 4.7%, to 30.51. Nvidia was among the 10 biggest gainers, adding 3.72, or 2.7%, to 143.05.

Federal Reserve Chair Janet Yellen pictured in March. Investors are waiting for minutes from the Fed’s June meeting.
Federal Reserve Chair Janet Yellen pictured in March. Investors are waiting for minutes from the Fed’s June meeting. Photo: Susan Walsh/Associated Press

The tech sector is expected to help lead second-quarter earnings growth in the S&P 500, according to FactSet, but some investors and analysts are concerned that the group’s outperformance has left it susceptible to a selloff.

With investors piling into and out of some of the biggest tech stocks recently, they will likely continue favoring companies with good cash flow, said Laurie Kamhi, managing director and partner of LCK Wealth Management at HighTower.

“There’s going to be a huge disparity in the winners and losers,” she said.

Meanwhile, energy shares slid as oil prices tumbled anew.

The energy sector was the S&P 500’s worst performer, falling 1.3%. U.S. crude for August delivery fell 4.1% to $45.13 a barrel to end an eight-session winning streak—its longest since 2010. Oil entered into a bear market June 20 amid oversupply concerns, before prices rallied at the end of the month.

“I’ve been a long-term believer of the view, ‘Sell rallies in oil,’” said Nathan Thooft, senior managing director of global asset allocation at Manulife Asset Management. “This is just another instance of that. The overall supply dynamic is still not solved,” he said.

Falling oil prices helped support bonds and other haven assets, with the yield on the benchmark 10-year U.S. Treasury note falling to 2.334% from 2.352% Monday. Yields fall as prices rise.

Market reaction was muted to the Federal Reserve’s minutes from its June meeting, which showed officials readying plans to start gradually shrinking the central bank’s balance sheet in coming months. Some investors and analysts said the minutes weren’t surprising after a number of global central banks struck a more hawkish tone last week.

“Markets seem to have an understanding of where the Fed’s mind is today, and nothing has altered that path as of yet,” said Mr. Thooft.

Elsewhere, the Stoxx Europe 600 and Japan’s Nikkei Stock Average rose 0.2%.