Nasdaq drops further as techs fall out of favour

By Sruthi Shankar and Rama Venkat Raman

(Reuters) - The tech-heavy Nasdaq Composite index slipped further in early afternoon trading on Wednesday as investors shifted to financials that have been bolstered by strong economic data and encouraging comments from Fed officials.

The S&P technology index <.SPLRCT>, the best performing sector this year, dropped as much as 3.3 percent, its worst single-day decline since June 2016.

The high-flying FAANG stocks - Facebook , Amazon , Apple , Netflix and Google parent Alphabet - fell between 2.8 percent and 5.3 percent.

In contrast, JPMorgan and Bank of America climbed about 2 percent, putting the S&P financial index <.SPSY> on track for its best two-day gains in nearly a year.

"What we're seeing is a combination of defence positioning, with people taking some profit out of the high growth areas, technology specifically, and rotating into sectors that should hold up better if we get any negative news on tax bill or the debt ceiling," said Jonathan Mackay, investment strategist at Schroders.

Fed chair Janet Yellen said on Wednesday that a strengthening economy would warrant continued rate increases. Her comments come a day after Fed chair nominee Jerome Powell said that the case for a December rate hike was coming together and hinted at lighter bank regulation.

The second revision of third-quarter gross domestic product showed growth increased at a 3.3 percent annual rate, up from the previously reported 3 percent.

The data and the upbeat comments helped U.S. 10-year note and 30-year bond yields climb to two-week peaks.

Investors are also tracking progress on the U.S. tax bill. Senate Republicans on Tuesday rammed forward the bill, which corporate America is hoping will slash business tax rates, in an abrupt, partisan committee vote that set up a full vote by the Senate as soon as Thursday.

At 12:32 p.m. ET (1732 GMT), the Dow Jones Industrial Average was up 50.27 points, or 0.21 percent, at 23,886.98, the S&P 500 was down 4.05 points, or 0.15 percent, at 2,622.99 and the Nasdaq Composite was down 92.29 points, or 1.34 percent, at 6,820.07.

Chipotle Mexican Grill gained 3.03 percent after the burrito chain said it would seek a turnaround expert to replace founder Steve Ells as chief executive.

Autodesk was the biggest loser on S&P 500, slumping about 16 percent following the AutoCAD maker's weak revenue forecast and restructuring plan.

Declining issues outnumbered advancers on the NYSE by 1,540 to 1,335. On the Nasdaq, 1,454 issues rose and 1,416 fell.

(Reporting by Sruthi Shankar in Bengaluru; editing by Bernard Orr and Sriraj Kalluvila)