SAN FRANCISCO (Reuters) - Shares of Facebook FB.O, Apple AAPL.O and other technology heavyweights dropped on Wednesday, creating uncertainty over whether the top-performing sector's record-breaking rally this year is ending or merely taking a break.

A day after hitting a record high, the S&P 500 information technology index .SPLRCT fell 2.9 percent and was on track for its worst session since June. The Philadelphia Semiconductor Index .SOX dropped 4.38 percent, heading for its worst session in a year.

Wednesday’s was the latest in a handful of technology selloffs this year that increased chances that the sector’s rally might be ending. Previous tech drops were short-lived and were followed by record highs.

“It’s all rotation. What we’ve had is money flowing into these stocks again and again for so long, like Apple, Facebook, Google. Now you’re seeing that trade reverse,” said Dennis Dick, head of markets structure at Bright Trading LLC in Las Vegas.

Facebook, Apple, Amazon.com AMZN.O, Netflix NFLX.O and Google parent-company Alphabet GOOGL.O - the so called FAANG stocks that have helped power the S&P 500's 17-percent rally this year - all lost ground.

Apple fell 2.5 percent, reducing its gain this year to 45 percent. Facebook slid 3.8 percent, Alphabet lost 2.5 percent and Netflix slumped 6.8 percent.

Those losses were offset by a jump in banks as well as telecommunications stocks, which have underperformed this year. Sports apparel seller Under Armour UAA.N, the S&P 500's worst performer in 2017, rallied 5.2 percent.

Slideshow ( 2 images )

Still, the S&P 500 IT index has gained 36 percent in 2017, accounting for a quarter of the overall S&P 500’s $24 trillion value, the highest proportion since the dot-com bubble in 2000.

The semiconductor index has surged 41 percent this year, helped by strong global demand for chips as well as a wave of consolidation across the industry.

Those soaring prices have left the tech sector trading at 19 times expected earnings, versus the S&P 500's P/E multiple of 18, according to Thomson Reuters Datastream. (reut.rs/2ACFW1k)

Attracted to above-average earnings growth in a tepid global economy, investors have been willing to pay premium prices to own leading technology companies that are expanding their marketshare and growing quickly.

“They’re rallying because they have new business models that legacy companies are having a hard time adjusting to,” said Jim Bianco, president of Bianco Research in Chicago, adding that he was recommending to clients that they take advantage of Wednesday’s drop to buy more tech shares.