Wall Street dips after rally; biotechs drag Nasdaq

NEW YORK (Reuters) - U.S. stocks dipped on Thursday, with the Nasdaq underperforming other major indexes, as investors once again sold high-flying tech and biotech shares and bought defensive sectors.

Biotech and large technology stocks, some of the biggest gainers in 2013, slumped on Thursday. Both the Nasdaq biotechnology index <.NBI> and the NYSEArca biotech index <.BTK> lost more than 3 percent. The S&P technology sector <.SPLRCT> shed 1.2 percent as one of the worst-performing S&P sectors.

Google Inc , which was down 2.8 percent at $548.62, and Biogen Idec Inc , down 2.9 percent at $292, were among the biggest drags on the S&P 500.

With the losses, biotech gave back all of the gains it amassed late Wednesday after the release of minutes from the latest Federal Reserve policymakers' meeting showed members as more supportive of keeping rates low than earlier expected.

"The last couple of days, the markets have been focused on what the Fed is going to do and when a rate hike is likely. Yesterday we got the news once again that it is not likely, so our favorites went up," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

Reception for three initial public offerings was mixed.

Shares of bailed out auto-lender Ally Financial Inc fell in its market debut, the biggest U.S. initial public offering so far this year. Its shares were down 2.2 percent at $24.46.

Two biotech companies - Cerulean Pharma Inc and Adamas Pharmaceuticals Inc - went in opposite directions on their first trading day. Cerulean was up 6.4 percent at $7.45 while Adamas fell 3.2 percent to $15.48.

By contrast, of the 10 major S&P sector indexes, most defensive sectors advanced, led by telecoms <.SPLRCL>, utilities <.SPLRCU> and consumer staples <.SPLRCS>.

The Dow Jones industrial average <.DJI> fell 118.96 points or 0.72 percent, to 16,318.22, the S&P 500 <.SPX> lost 21.39 points, or 1.14 percent, to 1,850.79 and the Nasdaq Composite <.IXIC> dropped 91.472 points, or 2.19 percent, to 4,092.428.

Bed, Bath & Beyond shares slumped 6.4 percent to $63.56 as the worst performer on both the S&P 500 and Nasdaq 100 <.NDX> indexes after the domestic merchandise retailer reported fourth-quarter earnings.

The lackluster earnings overshadowed optimistic data on the labor front. Initial jobless claims dropped sharply last week to the lowest in almost seven years, which suggests job growth may be picking up after a harsh winter.

Imperva Inc plunged 41.9 percent to $28.91 after the data center security company reported preliminary fist-quarter results. Rival FireEye Inc lost 8.2 percent to $51.76.

(Editing by Nick Zieminski and Bernadette Baum)

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