Wall Street ends lower as tech struggles resume
NEW YORK (Reuters) – U.S. stocks closed lower after a choppy trading session on Thursday as heavyweight tech-related stocks resumed their decline following a sharp rebound the previous session, while elevated jobless claims reminded investors of a still-difficult recovery ahead.
Names that have rallied since March lows, such as Apple Inc, Microsoft Corp and Amazon.com, all fell at least 2.8%.
Tesla Inc rose 1.4%, initially helping to limit the Nasdaq’s losses before the tech-heavy index’s slide widened.
The NYSE FANG+TM Index, which includes the core FAANG stocks, fell 1.8%, and all 11 sectors of the S&P 500 traded lower.
Wall Street’s main indexes bounced back sharply on Wednesday from their biggest three-day rout since March, as investors returned to tech-focused stocks that are deemed insulated from the current economic downturn.
The number of Americans filing new claims for unemployment benefits remained high last week, Labor Department data showed, as layoffs and furloughs persisted across industries.
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In addition, the U.S. Senate on Thursday killed a Republican bill that would have provided around $300 billion in new coronavirus aid, as Democrats seeking far more funding prevented it from advancing.
Senate Majority Leader Mitch McConnell said in an interview with Fox News the electoral outcome for control of the Senate could go either way.
“It’s more of this sort of stew of stuff than has come together than any one particular thing you can point to, and maybe most importantly you are looking at an extended market,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
“This thing has had a massive move so the line of least resistance might be to correct a little bit.”
Massocca cited election uncertainty and the length of time it may take the economy to fully reopen due to the coronavirus pandemic.
The Dow Jones Industrial Average fell 405.89 points, or 1.45%, to 27,534.58, the S&P 500 lost 59.77 points, or 1.76%, to 3,339.19 and the Nasdaq Composite dropped 221.97 points, or 1.99%, to 10,919.59.
The S&P tech index was one of the weaker performers on Thursday afternoon, stumbling 2.28%. Despite the recent pullback, the tech index is up about 24% in 2020, far outperforming the benchmark S&P 500’s rise of 3.3% in the same period.
A few notably large, bullish tech-related options positions in Facebook Inc, Adobe Inc and Netflix Inc were partially unwound on Thursday, in line with more cautious sentiment toward tech names, according to Christopher Murphy, co-head of derivatives strategy at Susquehanna Financial Group.
Many market participants view the sell-off as a bout of turbulence rather than the start of a deeper slide.
The CBOE volatility index climbed on Thursday. The index hit a near three-month high at the start of a historically tumultuous September. Investors have also remained cautious as data paints a mixed picture of U.S. economic health.
A separate report showed U.S. producer prices rose slightly more than expected in August as the cost of services increased solidly.
Energy stocks dropped 3.67% as oil prices extended losses after U.S. data showed a surprise build in crude stockpiles last week and on forecasts for lower global oil demand.
Declining issues outnumbered advancing ones on the NYSE by a 2.14-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored decliners.
The S&P 500 posted 6 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 42 new highs and 25 new lows.
About 9.72 billion shares changed hands in U.S. exchanges, compared with the 9.23 billion daily average over the last 20 sessions.
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