US stocks drop as tech slump continues

New York - US stocks slumped for a third day in a row on Monday as investors worried about whether high-flying technology stocks are overvalued and cautiously anticipated earnings season.

The Dow Jones Industrial Average tumbled 166.84 points (1.02%) to 16,245.87.

The broad-based S&P 500 sank 20.05 (1.08%) to 1,845.04, while the tech-rich Nasdaq Composite Index declined 47.97 (1.16%) to 4,079.75.

The losses followed weakness since the middle of last week. Technology and biotech stocks have been among the feeblest equities, although a handful of hard-hit equities posted gains Monday.

"Most of this selling has concentrated on these darling stocks and I guess investors are questioning their value," said Peter Cardillo, chief market economist at Rockwell Global Capital.

Cardillo also attributed the losses to "a little anxiety before earnings."

Earnings season unofficially kicks off Tuesday with Alcoa after the markets close and with reports Friday from banking giants JPMorgan Chase and Wells Fargo.

Weak technology stocks included LinkedIn (-3.7%), Yahoo (-3.5%) and Tesla Motors (-2.2%). Apple lost 1.6% and Google fell 0.9%.

But some other tech and biotech stocks bounced back. Biogen advanced 2.1%, while Facebook added 0.4% and Netflix edged up 0.2%.

Financial stocks were generally weak, including Bank of America (-2.0%), Wells Fargo (-1.8%) and Dow members Goldman Sachs (-2.9%) and American Express (-2.9%).

A handful of companies in the Dow posted increases, including technology companies IBM (+1.4%), Intel (+1.2%) and Cisco (+0.6%).

Cardillo said some investors may be moving funds out of "darling" momentum stocks to more "defensive" names. IBM, Intel and Cisco all pay dividends.

Ireland-based Mallinckrodt announced it will buy US rival Questcor Pharmaceuticals in a roughly $5.6bn cash-and-stock deal expected to expand the firm's drive in the specialty drugs field. Questcor shot up 18.7%; Mallinckrodt fell 2.5%.

Dow member Pfizer slumped 3.0% despite reporting over the weekend that its palbociclib treatment resulted in "significantly prolonged" survival rates for patients with advanced breast cancer. However, Morgan Stanley said the timing for regulatory approval remained unclear.

Bond prices rose. The yield on the 10-year US Treasury declined to 2.70% from 2.73% on Friday, while the 30-year dipped to 3.56% from 3.59%. Bond prices and yields move inversely.