Technology companies fall again, sending stock market tumbling

Technology stocks tumbled for the third day in a row Monday as a sharp reversal for some of Wall Street’s recent favorites worsened — sending major U.S. indexes skidding.

Tech companies have done far better than the rest of the market in recent years, but they’ve fallen after Facebook and Twitter both reported weak user growth in the second quarter. Microsoft and Alphabet slumped Monday, and Facebook, Twitter and Netflix have all fallen at least 20% from their record highs this month.

“Is the stock 20% less valuable, or was it misvalued to begin with?� said Mark Hackett, chief of investment research at financial services firm Nationwide.

Still, Hackett said the drop for highflying technology companies could become a good thing for the market if investors focus on companies with steadier revenue and more cash, including software makers, banks and industrial firms.

“It would be nice to see a broadening of the strength,� he said.

CBS stock plunged again as investors wondered if the broadcaster will replace longtime Chief Executive Les Moonves soon. On Friday, a New Yorker article quoted six women accusing Moonves of sexual harassing them.

CBS said Monday that Moonves will remain CEO while an outside counsel investigates the allegations against him. The company also postponed its annual shareholders meeting. Its stock lost 5.1% to $51.28 on Monday after a 6.1% drop Friday.

The S&P 500 lost 16.22 points, or 0.6%, at 2,802.60, and the Dow Jones industrial average fell 144.23 points, or 0.6%, to 25,306.83.

The tech-laden Nasdaq composite fell 107.41 points, or 1.4%, to 7,630. The Nasdaq has fallen at least 1% for three days in a row, which hadn’t happened in three years.

Smaller companies fared as badly as larger ones. The Russell 2000 index slid 10.21 points, or 0.6%, to 1,653.13.

Twitter dropped 8% to $31.38, adding to its 20.5% plunge Friday. Facebook fell 2.2% to $171.06. Netflix, which reported weak subscriber growth in early July, fell 5.7% to $334.96.

Hackett, of Nationwide, said that when investors value companies based on measurements such as user growth and subscriptions instead of more traditional figures based on earnings, the stocks become vulnerable to big drops.

Even with its recent tumble, the technology sector of the S&P 500 is up almost 26% over the last year. The S&P 500 itself is up a bit more than 13% over that time.

Caterpillar surpassed Wall Street expectations in the second quarter and raised its forecasts for the year as the construction market remained strong. The company said new tariffs will cost it $100 million to $200 million this year, and it will make up for it by raising prices.

That initially encouraged investors, but Caterpillar gave up an early gain and fell 2% to $139.75.

Pork and poultry processor Tyson cut its profit forecast because of rising tariffs and uncertainty about trade policies. The stock sank 7.6% to $58.72 on Monday.

Energy companies climbed as the price of benchmark U.S. oil spurted higher by 2.1% to $70.13 a barrel. Brent crude, the international standard, rose 0.9% to $74.97 a barrel in London.

Wholesale gasoline lost 0.1% to $2.16 a gallon. Heating oil gained 0.7% to $2.17 a gallon. Natural gas rose 0.5% to $2.80 per 1,000 cubic feet.

The Federal Reserve will begin a two-day meeting Tuesday. The Fed has said that it may raise interest rates two more times in 2018, but few economists expect a move at this upcoming meeting.

The Bank of England is expected to raise its key interest rate by a quarter of a percentage point Thursday as inflation remains high. The Bank of Japan will also meet this week.

The yield on the 10-year Treasury note rose to 2.97% from 2.96% late Friday. It’s been climbing for the last couple of weeks and is close to breaching 3% for the first time since May.

Gold slipped 0.1% to $1,231.50 an ounce. Silver rose 0.3% to $15.54 an ounce. Copper lost 0.4% to $2.79 a pound.

Japan’s Nikkei 225 fell 0.7%, South Korea’s Kospi slipped 0.1% and the Hang Seng in Hong Kong lost 0.2%.

In Europe, France’s CAC 40 fell 0.4%, and the DAX in Germany dropped 0.5%. The FTSE 100 in London was virtually flat.

The dollar held steady at 111 Japanese yen. The euro rose to $1.1710 from $1.1656, and the British pound rose to $1.3135 from $1.3113.

UPDATES:

2:40 p.m.: This article was updated with closing stock market results.

8:40 a.m.: This article was updated with the latest stock market results.

This article was originally published at 7 a.m.