Wall Street sinks on tech selloff, recovery worries
By Medha Singh and Devik Jain
(Reuters) – Wall Street’s main indexes 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.com, Netflix and Alphabet sank between 4.6% and 6.2%. The NYSE FANG+TM Index, which includes the five core FAANG stocks, shed 6.2%, putting it on track for its biggest one-day decline since March 16.
Unprecedented fiscal and monetary support as well as increasing bets on stay-at-home tech stocks have powered a rally in U.S. stocks in recent weeks, sending the S&P 500 and Nasdaq to record closing highs on Wednesday.
“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.”
Earlier in the day, data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained extraordinarily high. The government’s closely watched monthly payrolls report is set for Friday.
“We’re going to struggle to put people back to work, it’s going to be another three to four years and then we have to sustain it,” said Greg Hahn, chief investment officer at Winthrop Capital Management in Indiana.
Separately, a survey showed U.S. 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 technology sector declined 5%, while communication services and consumer discretionary lost more than 3% each. At 11:34 a.m. ET, the Dow Jones Industrial Average was down 633.96 points, or 2.18%, at 28,466.54, the S&P 500 was down 105.09 points, or 2.93%, at 3,475.75. The Nasdaq Composite was down 530.39 points, or 4.40%, at 11,526.06.
Tesla Inc tumbled 7.4%, falling for the third straight session.
PVH Corp rose 3.6% 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.
Declining issues outnumbered advancers for a 3.87-to-1 ratio on the NYSE and for a 4.12-to-1 ratio on the Nasdaq.
The S&P index recorded 18 new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 38 new lows.
(Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur and Sriraj Kalluvila)