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NEW YORK: Major Wall Street indices closed sharply lower Thursday, marking their deepest one-day declines since June as investors exited the high-flying tech sector, while economic data highlighted concerns about a long and difficult recovery.
The Nasdaq led the pullback with a nearly 5% drop a day later and the S&P 500 posted record closing highs.
The Nasdaq’s biggest hurdles came from heavyweights Apple Inc, Microsoft Inc, Amazon.com Inc, Tesla Inc and Nvidia Corp.
The S&P tech sector and the Philadelphia Chip Index fell nearly 6% on the day.
Markets had skyrocketed from March lows, fueled by hopes of fiscal and monetary support for a quick economic recovery. But some participants said investors had become too optimistic.
“Think about the growing number of risks that the market has been ignoring for the past few months here,” said Emily Roland, co-chief investment strategist at John Hancock Investment Management. “We are 60 days away from the election. That may be an area where investors are getting a little scared.”
He added: “Looking at today’s data, the market has had the ability to go further and has not paid attention to a macro environment that is, yes, improving, which is encouraging, but the economy is still fragile here.”
Earlier in the day, data showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained extraordinarily high. The next big data focus for investors is the monthly payroll report on Friday morning.
On the other hand, a survey showed that growth in the US service industry slowed in August, likely as momentum from business reopening and fiscal stimulus waned.
The Dow Jones Industrial Average fell 807.77 points, or 2.78%, to close at 28,292.73, the S&P 500 lost 125.78 points, or 3.51%, to 3,455.06 and the Nasdaq Composite fell 598, 34 points, or 4.96%, to 11,458.10.
While the S&P and Nasdaq percentage drops on Thursday were the deepest since June 11, it was the Dow’s biggest one-day drop since June 26.
It was the Nasdaq’s third-largest one-day drop since a record close, according to data from Bespoke Investment Group.
The Wall Street fear gauge crossed its 200-day moving average to its highest level in weeks. He closed 7 points at 33.60.
However, some investors seemed indifferent to the sale.
“(Investors) are in love with tech stocks and it will take more than this to make them fall in love with them,” said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.
Sebastian Leburn, a senior portfolio manager at Boston Private in Florida, said the drop was “just a rotation” of tech stocks: “I don’t think it’s anything sinister.”
Another key Nasdaq component, Tesla Inc, fell 9% on Thursday after falling sharply the previous two sessions.
PVH Corp was up 3.3% after the Calvin Klein owner posted a surprise quarterly profit, driven by strong online demand for comfortable and casual clothing during the coronavirus-led shift to work from home.
Issues declining outnumbered those advancing on the NYSE by 4.14 to 1; on the Nasdaq, a 4.20-to-1 ratio favored declines.
The S&P 500 posted 18 new 52-week highs and no new lows; the Nasdaq Composite recorded 24 new highs and 53 new lows.
About 11.98 billion shares changed hands on US exchanges, compared to the daily average of 9.22 billion for the last 20 sessions.
– Reuters
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