By Medha Singh
July 24 (Reuters) - Technology stocks dragged Wall Street's main indexes lower on Friday on the back of Sino-U.S. tensions and fears over rising U.S. COVID-19 cases, putting the S&P 500 on track to erase all of its gains for the week.
High-flying companies Apple Inc AAPL.O and Microsoft Corp MSFT.O, which were pivotal in driving the stock market's recovery in recent months, fell 0.5% and 0.3% respectively.
The S&P technology index .SPLRCT dropped 0.8%.
Intel Corp INTC.O tumbled 15.3% after the company said it was six months behind schedule in developing next-generation, power-efficient chip technology and that it would consider farming out more work to outside semiconductor foundries.
Rival Advanced Micro Devices Inc AMD.O gained 13%, but the broader Philadelphia semiconductor index <.SOX> dropped 0.7%.
U.S. stocks are set to fall for the second day as investors feared that the COVID-19 health crisis that has spiraled in recent weeks and has infected over 4 million Americans, could hamper a recovery in economic activity.
Optimism about a potential coronavirus vaccine and fiscal stimulus package had helped the benchmark S&P 500 hit a five-month high earlier this week.
"Our fundamental outlook for the U.S. economy is a long recovery. We do not see sustained growth in employment even under scenario where we have a vaccine, it's still going to take a long time for this virus to get under control," said Greg Hahn, chief investment officer at Sanctuary Wealth in Indiana.
Latest survey showed U.S. business activity increased to a six-month high in July, but companies reported a drop in new orders as a resurgence in new COVID-19 cases weighed on demand.
Sentiment took a hit earlier in the day after Beijing ordered Washington to close its consulate in the city of Chengdu, days after U.S. ordered the closure of the Chinese consulate in Houston.
At 11:22 a.m. ET, the Dow Jones Industrial Average .DJIwas down 112.61 points, or 0.42%, at 26,539.72 and the S&P 500 .SPXwas down 14.53 points, or 0.45%, at 3,221.13. The Nasdaq Composite .IXICwas down 72.09 points, or 0.69%, at 10,389.33.
Shares of U.S. drugmakers fell ahead of executive orders by President Donald Trump aimed at lowering drug prices.
The S&P healthcare index .SPXHC shed 1.1%.
Of the 113 S&P 500 companies that have reported quarterly results, 80.5% of them have beaten dramatically lowered profit estimates, according to IBES Refinitiv data.
American Express Co AXP.N slipped 1.2% after it reported an 85% slump in quarterly profit as credit card spending collapsed.
Declining issues outnumbered advancers for a 1.65-to-1 ratio on the NYSE and for a 2.27-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and no new low, while the Nasdaq recorded 17 new highs and 14 new lows.
(Reporting by Medha Singh and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)
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