Wall Street slips after seven-day rally, tech shares fall

By Leah Schnurr

NEW YORK (Reuters) - U.S. stocks sagged on Tuesday as investors paused after a seven-session string of gains, sending large-cap technology shares lower.

Investors' confidence has grown in recent months, leading to a gain of more than 10 percent for the year by the Dow and nearly 9 percent by the S&P 500. Signs of improvement in the economy and the Federal Reserve's quantitative easing have helped to drive the advance.

Heading into Tuesday, both the Dow and benchmark S&P 500 index had rallied for seven consecutive sessions, with the Dow closing at another record high on Monday. The S&P is within reach of its all-time closing high of 1,565.15, set on October 9, 2007.

 

Tech shares, which have lagged the rally, pulled indexes lower as heavyweights such as Apple and Google tumbled.

Apple dropped 1.3 percent to $431.99. An analyst said the company has a 25 percent chance of missing its quarterly revenue forecast as iPhone sales slow.

Google fell 1.1 percent to $825.60, while the S&P tech sector lost 0.8 percent.

"I think we're in a little bit of a regroup after a nice week last week," said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia, Pennsylvania.

After a light economic calendar the last couple of days, investors will start to turn their attention to retail sales data due on Wednesday to get a sense of how consumers are faring, Brunner said. Sales are expected to have increased 0.5 percent in February.

Adding to the weakness, Jens Weidmann, head of Germany's central bank and a member of the European Central Bank's governing council, said the euro zone crisis was not over.

While it was a relatively small decline, it was the worst day for the S&P since late February. Pullbacks during the rally so far this year have not been too deep as investors look for a good place to buy. Market moves have also been more muted in recent days, even as stocks have ground higher.

Offsetting the decline, the healthcare sector rose 0.4 percent. Traditionally considered a defensive bet, the sector has been one of the leaders of the rally so far this year, accelerating by nearly 12 percent.

In the short-term, however, healthcare appears to be overbought, suggesting investors may start to put their money elsewhere or take profits. Based on the relative strength index, healthcare has been overbought since the beginning of the month.

The drop in tech shares brought the sector below the overbought level after briefly crossing above it on Monday.

The Dow Jones industrial average fell 15.12 points, or 0.10 percent, to 14,432.17. The Standard & Poor's 500 Index slipped 5.18 points, or 0.33 percent, to 1,551.04. The Nasdaq Composite Index lost 17.00 points, or 0.52 percent, to 3,235.87.

Merck shares gained 3.2 percent to $45.04 to help curb declines on both the Dow and S&P after the pharmaceutical company said an outside board had allowed it to continue a trial assessing its Vytorin cholesterol drug.

Yum Brands Inc rose 1.6 percent to $68.92 after the parent company of the KFC restaurant chain reported an unexpected rise in February sales in China.

(Editing by Nick Zieminski)