(Bloomberg) — Technology shares led U.S. stocks lower with investors continuing to rotate out of this year’s top performers. Treasuries gained with American initial jobless claims posting their smallest weekly decline since March.

The tech-heavy Nasdaq 100 dropped the most among major U.S. benchmarks, with Microsoft Corp. and Apple Inc. leading the declines. The S&P 500 was in the red after two consecutive days of gains, with Bank of America Corp. falling after profits slid. Morgan Stanley gained as revenue and earnings jumped to an all-time high.

“You’re seeing a bit of a rotation into some of the more defensive areas of the market,” said Rob Romano, head of Americas portfolio advice at UBS Global Wealth Management. “We’ve seen this a few times in the past, it’s unclear if this is just a pause or a material rotation, but it’s something to keep an eye on.”

The Stoxx Europe 600 Index tracked Asian shares lower as Chinese retail sales in June came in softer than expected, even as the economy returned to growth last quarter. The euro was little changed after the European Central Bank kept its emergency monetary stimulus program unchanged.

The reminder from China of the long road ahead to a full global recovery is quashing optimism seen earlier in the week spurred by progress in developing a coronavirus vaccine. While China is experiencing a modest domestic recovery, the world’s second-largest economy remains vulnerable to setbacks as shutdowns continue to hamper activity across the globe.

”There’s definitely a push-pull,” said Chris Gaffney, president of world markets at TIAA Bank. “Certain sectors of the economy are going well and the question now is with this second spike that we’re seeing — and have already seen — and as some states start to tighten back up, while we don’t expect a full lockdown it certainly puts questions on just how quickly this recovery is going to occur.”

Elsewhere, oil retreated from a four-month high after the OPEC+ alliance confirmed it would start tapering output cuts from next month.

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