Stocks fall as tech remains under pressure, Tesla tumbles

By Chuck Mikolajczak NEW YORK (Reuters) - U.S.

Reuters September 09, 2020 03:05:09 IST
Stocks fall as tech remains under pressure, Tesla tumbles

Stocks fall as tech remains under pressure Tesla tumbles

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks dropped for a third straight session on Tuesday as a sell-off in high-flying technology names continued from the prior week, while Tesla was poised for its worst day in nearly six months after the stock was passed over for inclusion in the S&P 500.

Ten of the 11 major S&P sectors were lower, with only the defensive utilities group edging higher. News on Friday that SoftBank <9984.T> made significant option purchases during the run-up in U.S. stocks added to investor nervousness.

Technology <.SPLRCT> once again dragged indexes lower with a decline of nearly 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, up about 25%.

"Valuations were stretched and now that it is starting to sell off a little bit, they are shaking the branches and some of that weaker money is falling out," said Ken Polcari, chief market strategist at SlateStone Wealth LLC in Jupiter, Florida.

"You have a lot of people that are just suddenly getting very nervous because the sell-off the last three days has been relatively rapid."

In late afternoon trading, the Dow Jones Industrial Average <.DJI> was down 408.28 points, or 1.45%, at 27,725.03, the S&P 500 <.SPX> lost 66.07 points, or 1.93%, to 3,360.89 and the Nasdaq Composite <.IXIC> dropped 330.44 points, or 2.92%, to 10,982.70.

Energy <.SPNY> shares also 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 , Amazon.com , Apple , Tesla , Microsoft , Alphabet and Netflix had collectively lost more than $1 trillion in market capitalization since Sept. 2.

Tesla plunged 17.47%, on pace for its biggest daily percentage drop in almost six months 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 fell 3.0% after a report it was probing employees who were allegedly involved in the misuse of funds intended for COVID-19 relief. The wider banks index <.SPXBK> lost 3.0%, also tracking Treasury yields. [US/]

Value-linked stocks <.IVX> fell 1.2%, but outperformed the broader market and a 2.4% decline in the growth-link index <.IGX>. Wall Street's fear gauge <.VIX> climbed for the third time in four sessions.

Fears 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 jumped 9.1% after it acquired an 11% stake worth $2 billion in U.S. electric-truck maker Nikola Corp . The truck maker's shares surged 45.9%.

Declining issues outnumbered advancing ones on the NYSE by a 2.57-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 2 new lows; the Nasdaq Composite recorded 28 new highs and 45 new lows.

(Reporting by Chuck Mikolajczak in New York; Editing by Maju Samuel and Matthew Lewis)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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