Tech Drove Stocks Skyward. It’s a Different Story on the Way Down.

Tech Drove Stocks Skyward. It’s a Different Story on the Way Down.

The world’s largest technology companies drove the stock market to record highs this year. As stocks have tumbled, though, it’s more like they’re just along for the ride.

The rout, unlike the rally, has been a broad-based affair, suggesting that investors are less concerned that the tech giants’ shares rose too far too fast. Rather, they are worried about the fundamentals of the United States economy and the continuing profitability of companies of all kinds.

“I think there’s something that’s bothering the markets and I think it’s fears about earnings estimates,” said Randy Watts, chief investment strategist with the adviser firm William O’Neil & Co.

After nearly a decade-long bull market, investors have been increasingly skittish about how long the push higher could extend. And sweeping declines like the one roiling stocks now may signal that the largely steady rise is indeed under threat.

The S. & P. 500 topped out on Sept. 20, up 9.6 percent for the year, and nearly half of the increase was fed by the performance of five huge tech companies: Apple, Amazon, Microsoft, Netflix, and Google’s parent company, Alphabet.

But in the weeks since that peak, the gains experienced by the benchmark stock index over the previous nine months have been wiped out.

The S. & P. 500 has been dragged down by smaller, domestically focused companies, cyclically sensitive industrial firms and global manufacturers like Caterpillar. Only 19 percent of the slump can be tied to the tech giants, compared with the 50 percent of the gain they were responsible for.

Instead, companies like the fertilizer and chemical giant DowDupont and the home-improvements retailer Home Depot are pulling the S. & P. 500 down by more than they ought to, based on their size.

There are plenty of factors that have investors concerned: President Trump’s trade war with China; the Federal Reserve’s stated plans to keep raising interest rates; signs that labor and other costs could climb;, and slowing growth in Europe and China. The tax cuts that increased growth in profits this year will not have the same year-over-year effect in 2019.

Chemical and materials companies have experienced steep declines amid mounting concerns over global trade. DowDupont is still waiting for Beijing to approve one of its bioengineered soybeans to be imported into China, the world’s largest soybean market. The approval process may be more complicated now that soybean exports from the United States to China are subject to a 25 percent tariff imposed by Beijing over the summer in response to Mr. Trump’s tariffs on Chinese-made goods.

DowDupont is only the 39th largest company in the S. & P. 500, but its 17 percent drop in October made it one of the ten biggest contributors to the index’s downturn through Monday, according to the market data firm FactSet.

Home Depot is the 23rd largest company in the S. & P. 500., but it had played the ninth-largest role in the October sell-off through Monday. Its shares were down 14 percent this month as climbing interest rates slowed the housing market, a key factor in home improvement spending.

Bank of America, JPMorgan Chase, Mastercard and Visa — financial firms whose fortunes are closely linked to the economy’s overall health and sensitive to rising interest rates — have also helped pull down the market.

“Despite the fact that earnings are exceptional by any objective measure, investors are concerned that they will slow more dramatically than expected next year,” said Jason DeSena Trennert, managing partner at Strategas Research Partners, a markets and economic analysis firm.

The biggest tech firms have played a part in the broad decline, of course. The stock market benchmarks, such as the S. & P. 500, are weighted by market value, meaning the vast size of Apple, Amazon, Alphabet and Microsoft give them significant influence over how the index moves.

Amazon’s 19 percent drop in October — much of it coming after an earnings report that contained a disappointing outlook for the holiday season — made it the single biggest drag on the S. & P. 500 through Wednesday morning.

The software giant Microsoft had dropped more than 5 percent in October. Alphabet had fallen more than 9 percent. Facebook was down more than 6 percent for the month after rebounding on Wednesday after the release of the company’s quarterly earnings report.

The only big tech company left to report for the quarter is Apple, which is expected to release its results on Thursday. As of Wednesday, the company’s stock price was down more than 3 percent in October.

Those declines are not minor, but they are no big enough to signal to investors that they should worry about a bubble in the big tech stocks that have fueled so much of the gains of the past decade. Even with companies like Amazon, Microsoft and Alphabet having outsize sway over market benchmarks, the losses felt in other sectors suggest that when it comes to the falling indexes, the tech giants’ tumbles are more of a symptom than a cause.

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