NEW YORK (Reuters) – The five largest U.S. technology companies may have lost enough market capitalization over the past week to buy plane maker Boeing, but the benchmark S&P 500 stock index .SPX has managed to remain within a stone’s throw of its record high.
Apple <AAPL.O., Alphabet (GOOGL.O), Microsoft (MSFT.O), Amazon (AMZN.O) and Facebook (FB.O), the five largest U.S. technology stocks, have seen their combined market capitalization fall by about $120 billion since last Thursday.
By Thursday the S&P 500 technology index .SPLRCT had seen its largest five-day drop in a year.
The slide was again led by sector heavyweights Apple and Alphabet, as investors moved away from what had been the year’s best-performing sector and rotated portfolios into stocks that pay higher dividends amid some signs that U.S. economic weakness.
“I think it’s a perfectly normal backing off. Tech has done really well. All of sudden everyone wakes up and says, ‘Holy cow, maybe we’re getting ahead of ourselves,’ and backs off a little bit,” said Brad McMillan, Chief Investment Officer for Commonwealth Financial in Waltham, Massachusetts.
Among technology stocks hit, shares of Google’s parent Alphabet fell 0.8 percent Thursday after broker Canaccord Genuity downgraded its rating of the stock to “hold” from “buy.”
The broker downgrade triggered a broader technology sector selloff according to Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
Apple shares slid 0.6 percent on Thursday, extending their five-day decline to 6.9 percent. Barclays analyst Mark Moskowitz wrote that Apple is near the peak valuation levels in its iPhone 6 cycle which “could mean a bumpy ride lower” if the prospects for sales of its next phone disappoint.
Shares of social media company Snap Inc (SNAP.N) closed at their initial public offering price of $17 for the first time.
Some investors were selling technology shares to rotate into other sectors, such as beaten-down energy stocks, said Russ Koesterich, co-portfolio manager of BlackRock’s Global Allocation Fund. “It’s more the winners into the losers, rather than a broader move toward safety,” he said.
The recent decline notwithstanding, the technology sector remains the best performing so far this year, up 17.4 percent versus the overall S&P 500 index gain of 8.6 percent.