Stocks end lower as tech swoon persists, Tesla tumbles
By Chuck Mikolajczak NEW YORK (Reuters) - U.S. stocks closed lower for a third straight session on Tuesday as heavyweight technology names extended their sell-off, while Tesla suffered its biggest daily percentage drop after the stock was passed over for inclusion in the S&P 500.
By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks closed lower for a third straight session on Tuesday as heavyweight technology names extended their sell-off, while Tesla suffered its biggest daily percentage drop after the stock was passed over for inclusion in the S&P 500.
Each of the 11 major S&P sectors were lower, led by declines in technology <.SPLRCT> and energy <.SPNY>. Reports on Friday that SoftBank <9984.T> made significant option purchases during the run-up in U.S. stocks added to investor nervousness.
Technology once again dragged indexes lower with a drop of more than 3%, the third straight decline and worst three-day performance for the sector since mid-March. Even with the recent drop, the sector remains the best performer on the year.
"Things got expensive, they ran up, they got very concentrated and people got really giddy," said Willie Delwiche, investment strategist at Baird in Milwaukee. "Everyone is all loaded up on one side, it doesn’t take much of a ripple to knock some apples off the cart."
Unofficially, the Dow Jones Industrial Average <.DJI> fell 631.89 points, or 2.25%, to 27,501.42, the S&P 500 <.SPX> lost 95.11 points, or 2.78%, to 3,331.85 and the Nasdaq Composite <.IXIC> dropped 465.44 points, or 4.11%, to 10,847.69.
Energy shares slumped as oil prices fell below $40 a barrel.
Media reports of SoftBank's option purchases also reminded investors that market makers might have billions of dollars' worth of long positions as hedges against options trades.
Wall Street's rally, which has been fueled in large part by massive amounts of monetary and fiscal stimulus, screeched to a halt last week with the Nasdaq falling as much as 9.9% from its intraday record as investors booked profits after a run that lifted the index about 70% from its pandemic lows.
At session lows on Tuesday, Facebook
Tesla plunged to suffer its biggest daily percentage drop as the electric-car maker was excluded from a group of companies being added to the S&P 500. Investors had widely expected its inclusion after a blockbuster quarterly earnings report in July. Up to Friday's close, the stock had surged about 400% this year.
JPMorgan Chase & Co
Value-linked stocks <.IVX> fell, but outperformed the broader market and a decline in the growth index <.IGX>. Wall Street's fear gauge <.VIX> climbed for the third time in four sessions.
Concerns over potential U.S. sanctions against China's biggest chipmaker, SMIC <0981.HK>, hit domestic suppliers, with the PHLX semiconductor index <.SOX> down 3.43%.
General Motors Co
(Reporting by Chuck Mikolajczak in New York; Editing by Maju Samuel and Matthew Lewis)
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