Tech stocks tumble as Wall Street heads for worst day since June

Bengaluru — Wall Street’s main indices tumbled on Thursday, heading for their worst day since June as investors dumped high-flying technology-focused stocks, while economic data highlighted concerns about a long and difficult recovery.

Shares of Facebook, Apple, Amazon, Microsoft  and Google-parent Alphabet  sank between 4.9% and 7%.

The five stocks, deemed stay-at-home winners during the coronavirus crisis, account for nearly a quarter of the S&P 500’s market capitalisation and have driven the stock market’s narrow technology-led recovery from the pandemic lows hit in March.

The NYSE Fang+TM Index, which includes the core FAANG stocks, shed 5.5%, putting it on track for its biggest one-day decline since March 16.

The Philadelphia chip index and the S&P tech sector also dropped about 5% each, with investors also booking profits ahead of the Labor Day long weekend.

“Some of the stocks have gotten a little pricey, and what the actual cause is to spark this selloff is difficult to say,” said Randy Frederick, vice-president of trading and derivatives for Charles Schwab in Austin.

“The leading sector for quite a long time has been the Nasdaq, which is very heavily weighted in technology stocks so people just saw this as an opportunity to take the profits off the table.”

The pullback in stocks comes a day after the S&P 500 and the Nasdaq closed at record levels and the Dow came within 1.5% of its February peak, powered by unprecedented fiscal and monetary support.

Earlier in the day, data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained strong. The closely watched monthly payrolls report is set for Friday

Separately, a survey showed US services industry growth slowed in August, likely as the boost from the reopening of businesses and fiscal stimulus faded.

Wall Street’s fear gauge crossed its 200-day moving average to hit its highest level in seven weeks.

The Dow Jones Industrial Average was down 692.33 points, or 2.38%, at 28,408.17, the S&P 500 was down 114.67 points, or 3.20%, at 3,466.17. The Nasdaq Composite was down 563.63 points, or 4.67%, at 11,492.81.

“The prevalent attitude in the market now is that this is a healthy correction,” said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.

“(Investors) are in love with tech stocks and it’s going to take more than this for them to fall out of love with them.”

Tesla  tumbled 8%, falling for the third straight session.

PVH   rose 4.5% after the Calvin Klein owner posted a surprise quarterly profit, boosted by strong online demand for comfortable and casual clothing during the coronavirus-led shift to work from home.

The S&P index recorded 18 new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 45 new lows.

Reuters

(Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur, Sriraj Kalluvila and Maju Samuel)