US markets closed mostly lower on tech selloff

The US markets closed mostly lower on Wednesday, while the Dow Jones Industrial Average closed at a new high even as the Nasdaq Composite logged its worst day in three months as a selloff in mega-cap technology shares, such as Facebook Inc., Apple Inc., and Amazon.com Inc., weighed on the tech-heavy index. Fed Chairwoman Janet Yellen’s last testimony before Congress, the Fed chairwoman was upbeat about the economic outlook and said inflation was likely to return to the 2% target. Yellen didn’t say anything explicit about what the Fed will do at its meeting in two weeks. She said that although asset valuations are high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained.

Meanwhile, the central bank detected a slight improvement in the outlook among contacts in its 12 districts, collected in its snapshot of the economy known as the Beige Book. The report covers October 6 to November 17. Overall, growth in the US remained at a modest to moderate pace, where it has been for most of the past year. Inflation pressures have strengthened over the past month, with some growth in transportation and manufacturing costs. In many cases, these increases were passed through to consumers. There were some of the price increases for lumber and building materials related to rebuilding after the recent hurricanes in the Southern and Eastern US. Wage gains remained modest to moderate despite widespread reports of tightness in labor markets. Employers were said to be increasing their use of signing bonuses and other nonwage benefits to retain or attract workers. Retail sales were flat, but the outlook for the holiday shopping season was generally optimistic. Manufacturing activity was up across the country.

On the economy front, the US economy’s pace of growth in the third quarter was raised to 3.3% from 3% under the government’s latest revision to gross domestic product. The improvement in GDP was spearheaded by stronger business investment. Spending on equipment, especially in transportation-related areas, rose 10.4% instead of 8.6%. Firms have increased spending on ways to deliver goods to customers who order online and to move people around amid an increase in travel. They are also relying more on technology to boost production at a time when skilled workers are increasingly hard to find. The increase in inventories, meanwhile, was raised modestly to $39 billion. Government outlays were revised from small decline to a mild increase. The increase in consumer spending, however, was barely changed at a still-solid 2.3%. Export growth was lowered a notch to 2.2%, but imports were revised to show a steeper 1.1% decline.

Separately, the National Association of Realtors said that pending-home sales jumped 3.5% in October, but remained 0.6% lower than a year ago. The pending-home sales index tracks real estate transactions in which a contract has been signed, but the deal has not yet been closed. Only the West saw a decline, of 0.7%, in October. The index for the Northeast edged up 0.5%, while the reading for the Midwest rose 2.8%. In the South, pending home sales soared 7.4%. The South is the only region in which pending sales are higher versus a year ago. September’s reading was revised down slightly, to 105.6.

The Nasdaq lost 87.969 points or 1.27 percent to 6,824.39, the S&P 500 edged lower by 0.97 points or 0.04 percent to 2,626.07, while the Dow Jones Industrial Average added 103.97 points or 0.44 percent to 23,940.68.