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Stocks extend losses as tech shares struggle, with the Dow dropping more than 250 points

Stocks fell on Thursday as investors paused in the wake of already-robust gains seen on Wall Street so far this week. Tech, the market leader since the rebound began in late March, was the biggest laggard. 

The Dow Jones Industrial Average dropped 185 points, or 0.7%. The S&P 500 slid 1.4% and the Nasdaq Composite fell by 2.6%

Apple shares dipped more than 4%. Facebook, Amazon and Alphabet were all down at least 1.7%. Microsoft slipped 2.5%. Netflix pulled back by 0.9%.

Thursday’s declines came after another record-setting session for the S&P 500 and the Nasdaq Composite. That run-up was powered by cyclical stocks, those that move in response to the health of the U.S. economy, and added to the market’s strong weekly gains. 

The S&P 500 and Nasdaq were up 2.1% and 3.1%, respectively, week to date entering the session. The Dow entered the session up 1.6% for this week. To be sure, some analysts think it may be time for the market to consolidate some of its recent sharp gains. 

“While we don’t expect a crash to happen again now, we don’t need new highs to grow every day to keep the uptrend alive either,” said Frank Cappelleri, executive director at Instinet, in a note. “With the [S&P 500] up 9/10 days and having just logged its biggest advance in two months, it’s certainly earned a period of which to digest.

Jobless claims improve

Thursday’s decline came even after better-than-expected unemployment data. 

The number of first-time filers for unemployment benefits totaled 881,000 for the week ending Aug. 29, the Labor Department said Thursday. Economists polled by Dow Jones expected first-time applications to have decelerated to 950,000 during the week ending Aug. 29.

That report came a day ahead of a widely anticipated U.S. jobs report. Economists polled by Dow Jones expect the U.S. economy to have added 1.321 million jobs in August. The jobs report will be released as lawmakers struggle to reach a deal on further coronavirus stimulus. 

“Let me be clear: The only reason we do not have a stimulus bill passed yet is because the economy and the markets are performing much better than people thought possible,” said Tom Essaye, founder of The Sevens Report. “The ‘best’ outcome for stocks into tomorrow’s jobs report is for a strong number, but not so much better than estimates that it relieves more pres-sure on Congress to get a deal done.”

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