* Declines in large technology-related companies put pressure on Nasdaq, S&P 500
* Walmart collapses as the bleak outlook overshadows optimistic fourth quarter sales
* Facebook shares fell with the blackout of news in Australia (adds closing market at 4pm)
NEW YORK, Feb. 18 (Reuters) – Shares on Wall Street fell on Thursday as investors switched big names in technology, while an unexpected rise in weekly US unemployment claims pointed to a recovery fragile in the labor market.
Shares of Apple Inc, Microsoft Corp, Tesla Inc and Alphabet Inc fell between 0.5% and 1.2%, weighing in both the S&P 500 benchmark and the heavy Nasdaq.
Facebook Inc’s shares plummeted while Wall Street assessed the broader ramifications of its move to block all news content in Australia.
Unofficially, the Dow Jones Industrial Average fell 118.7 points, or 0.38%, to 31,494.32, the S&P 500 lost 17.3 points, or 0.44%, to 3,914.03 and the Nasdaq Composite fell 100, 14 points, or 0.72%, to 13,865.36.
Strong gains, progress in implementing vaccination and hopes for a $ 1.9 trillion federal stimulus package helped the US stock indexes again to hit records earlier in the week.
But the months-high suggests that stocks now have high valuations, said Jason Pride, chief investment officer for private wealth in Glenmede, Philadelphia.
“We are still in a cautiously optimistic environment for the market as a whole,” said Pride, citing two reasons.
“We are going to have an economic recovery induced by the vaccine, which is number 1. The other side of the story is that the markets charged this price and headed for an overvalued territory. The markets will struggle with that, ”he said.
Concerns about the prospect of rising inflation have prompted investors to account for highly rated stocks in the S&P 500 communications technology and services sectors, which have sustained a 76% increase in the S&P 500 since its March 2020 lows.
Peter Essele, head of portfolio management at the Commonwealth Financial Network in Boston, said there was a lot of irrational exuberance built into stock prices this year.
“We started to enter an environment where risk really became a factor once again and, mainly, inflationary risk,” he said. “Now it is a question of whether the fundamentals will correspond to the price level that currently exists.”
A Labor Department report showed that the state’s initial claims for unemployment benefits rose to 861,000 last week from 848,000 the previous week, in part due to potential claims related to the temporary closure of auto factories due to the global chip shortage semiconductors.
Of the 11 main sectors of the S&P 500, only public services and discretionary consumer goods increased, while consumer basic products were traded close to breakeven.
Walmart Inc fell after the world’s largest retailer lost quarterly profit estimates and predicted a single-digit increase in net sales for fiscal year 2022.
“We are getting mixed readings. Strong retail sales and then bad complaints. We will probably see that for the rest of this quarter, ”said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
“Even Walmart’s story was not that bad on the surface; they will make more investments, ”said Ablin.
Walmart invested heavily in online advertising and healthcare businesses last year, using the pandemic-driven sales momentum to diversify beyond traditional retail.
Marriott International Inc rose after reporting a quarterly loss, as the hotel chain’s reserves declined due to pandemic-induced travel restrictions.
Reporting by Herbert Lash; additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Anil D’Silva and Dan Grebler