Shares of technology companies were battered in one of the sector's worst trading days of the year as fears of higher interest rates once again weighed on stocks.

The market was hit by a double whammy. The downgrade of U.S. government's debt by Fitch late Tuesday, combined with a more robust than expected report on private-sector employment from ADP, both point to potentially higher interest rates.

The "Magnificent 7"--Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Meta Platforms and Tesla--all slumped. Apple, which reports earnings on Thursday, held up reasonably well, down 1.6%. All of the others were down 2% or more, while Nvidia fell 4.8%.

There was profit-taking in the red-hot generative AI plays, with C3.AI down 10%, and Palantir off 5.1%. Likewise, there was widespread selling in cloud and security software stocks.

Shares of Advanced Micro Devices fell 7% after the chipmaker beat on earnings but left at least one analyst wondering if expectations for the company's AI initiatives were too high.

After the market closed, Qualcomm reported a profit that more halved from a year earlier as revenue declined, a sign of the ongoing turbulence in the market for smartphones.


Write to Amy Pessetto at amy.pessetto@dowjones.com

(END) Dow Jones Newswires

08-02-23 1719ET