(Corrects Sandisk spelling in paragraph 4)
By Avinash P and Purvi Agarwal
Aug 14 (Reuters) – Tech stocks dragged Wall Street lower on Friday after propelling the S&P 500 to a record high in the previous session, while investors digested weaker-than-expected retail sales data and monitored developments in the Middle East.
The S&P 500 information technology index dropped 0.5%, with Broadcom taking the biggest jolt, down 5.5%. The declines weighed down the Nasdaq.
Applied Materials fell 5.2%, even after the chip equipment maker forecast fourth-quarter revenue above Wall Street estimates. The Philadelphia SE Semiconductor index fell 1%.
Data storage companies defied the broader decline, with Sandisk and Western Digital advancing 5.7% and 1.4%, respectively. Energy stocks on the S&P 500 rose 1.5%, tracking a rise in oil prices.
Reddit surged more than 12% after the social media company was named a new addition to the S&P 500 index, effective August 18.
Financial and healthcare stocks declined, pulling the Dow lower.
“There is some profit taking, but I expect that most institutional investors remain fairly optimistic,” said Peter Andersen, founder and CEO of Andersen Capital Management.
Both the S&P 500 and the Nasdaq were on track for their third consecutive weekly gain, the longest winning streak since early April, as strong earnings and reduced bets on interest rate hikes after benign data lifted sentiment.
The July retail sales reading came in weaker-than-expected, after an unrevised 0.2% gain in June, the Commerce Department’s Census Bureau said.
At 12:14 p.m. ET, the Dow Jones Industrial Average fell 122.05 points, or 0.23%, to 53,717.94, the S&P 500 lost 12.71 points, or 0.16%, to 7,786.28 and the Nasdaq Composite lost 101.63 points, or 0.38%, to 26,701.40.
“We will always have these slight disruptions when we have negative economic news, especially when investors are trying to figure out how the Fed will react to this kind of news,” said Andersen.
Rising energy prices linked to the conflict, along with limited guidance from Fed Chair Kevin Warsh, left investors scrutinizing economic data for clues on growth.
Developments in the Middle East remained in focus as transit through the Strait of Hormuz appeared to have come to a near standstill after two more ships were attacked and the U.S. said it could maintain a naval blockade of Iran indefinitely.
The University of Michigan’s preliminary consumer sentiment survey came in at 51 in August, below expectations of 54.5, according to economists polled by Reuters.
Among other stocks, Workday slipped 3.8%. Reuters reported on Thursday that private equity firm Silver Lake was in talks to acquire the software firm.
Shares of some drone makers gained after President Donald Trump said late on Thursday that he would impose tariffs on imports of drones and their components.
Red Cat added 8% and Unusual Machines jumped 25.5%.
Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE and by a 1.13-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and one new low while the Nasdaq Composite recorded 68 new highs and 47 new lows.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Tasim Zahid and Anil D’Silva)
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