U.S. stocks drop as Technology, Biotech sell off

U.S. stocks tumbled on Wednesday, declining for the third straight session, as a selloff in technology and biotech stocks pushed indexes lower.

The S&P 500 SPX, -1.20% lost 19.06 points, or 0.9%, to 2,072.44. Technology stocks were hit hard, with the largest company on the index, Apple Inc. dropping more than 1%.

The Dow Jones Industrial Average DJIA, -1.39% shed more than 200 points to trade at 17,804.15 in recent action, turning negative for the year. The Nasdaq Composite COMP, -2.10% fell the most, dropping nearly 88 points, or 1.8%, to 4,906.81. Biotechnology stocks sold off, with the iShares Nasdaq Biotechnology ETF IBB, -3.51% dropping 3.5%.

John Manley, chief equity strategist at Wells Fargo Advantage Funds, attributed the selling action to the jitters stemming from uncertainty about the Fed policy and expectations that earnings would be poor.

“We are in the pre-announcement period, when companies will begin issuing warnings ahead of the earnings season and many investors expect that the first-quarter earnings will be poor. Typically, high-multiple stocks, such as biotechs and technology stocks get clipped badly during such times,” Manley said.

“There are also concerns that the Fed might be tightening too soon, given very weak growth we are experiencing,” Manley said.

Released ahead of the bell, orders for durable U.S. goods fell by more than expected in February, suggesting businesses remain reluctant to invest more aggressively.

Dan Greenhaus, chief global strategist at BTIG, said the market is still digesting economic reports in the wake of a Federal Reserve that said it would be “data dependent” in determining the pace of its first rate hike in nine years.

“Today’s durable-goods orders were in line with poor data of late, which suggest that the first-quarter GDP will be weak,” Greenhaus said.

Charles Evans, president of the Chicago Federal Reserve, speaking to press after a speech in London, warned that global uncertainty is the biggest risk to the U.S. economy, advocating interest rates stay low until 2016.

The dollar DXY, -0.28% shifted slightly lower Wednesday after data showed German business confidence rose in March for the fifth straight month, hitting its highest level since July 2014.

Stocks to Watch: Shares of Kraft Foods Group Inc. KRFT, +34.82% surged more than 35% i after a merger was announced with H.J. Heinz Company.

Shares of Kofax Ltd. KFX, +46.20% were up 46% after the software company agreed to be acquired by Lexmark International LXK, +5.61% late Tuesday.

Other markets: European stocks SXXP, -1.13% ended lower. In Asia, the Shanghai Composite Index SHCOMP, -0.83% snapped a 10-day winning streak, and the Japan Nikkei 225 index NIK, +0.17% edged up 0.2%.

Oil prices CLK5, +3.20% headed higher after briefly paring gains on weekly data showing another rise in U.S. crude stockpiles. Gold prices GCK5, +0.40% were moderately higher.

Source: MarketWatch