clearn.png
Sunday March 7th, 2021 9:50PM

Technology stocks keep stumbling; Nasdaq down 9% in 3 days

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — Big tech stocks are continuing their Icarus-like flight path, and more sharp declines for them are dragging Wall Street toward a third straight loss on Tuesday.

The S&P 500 was down 2.5% in afternoon trading. Big names that were the main reasons for Wall Street's rocket ride back to record heights were among the heaviest weights. Apple sank 5.9%, Microsoft pulled 4.6% lower and tech stocks across the index were down 4%.

The Dow Jones Industrial Average was down 570 points, or 2%, at 27,547, as of 3 p.m. Eastern time. The Nasdaq composite, which is packed with tech stocks, dropped 3.6% and is down 9.5% since Wednesday's record high close.

Tech stocks had been the darlings of Wall Street, even through the pandemic, on expectations that they can continue to deliver strong profit growth almost regardless of the economy and global health. Tech stocks in the S&P 500 are still up 25% for 2020 so far, and Amazon has rocketed 73%, even when unemployment remains high and much of the economy is limping ahead.

Analysts say a flurry of activity for stock options of Big Tech companies goosed the gains even further recently. With certain kinds of options, investors can make huge profits on a stock, without having to pay for its full share price, as long as the stock’s price keeps rising. If enough of these kinds of stock options are getting sold, it can create a buying frenzy for the stock that accelerates the gains even more.

But all that activity can unwind quickly and send prices tumbling if momentum turns, which is what happened last week. Apple stock dropped 3.1% for just its second weekly loss in the last 14 weeks.

Critics have long been saying that big technology stocks had shot too high, even after accounting for their strong profit growth. Such high-growth stocks have been trouncing the performance of stocks that look like better bargains, which are called “value stocks” by investors, by margins wide enough to raise eyebrows along Wall Street.

"The growth versus value outperformance was at an unheard of extreme at the end of August,” said Sam Stovall, chief investment strategist at CFRA.

That gap began to narrow on Thursday, when tech stocks began cracking and the Dow fell more than 800 points, and that "showed investors that tech stocks and growth stocks can fall just as easily as they rise,” Stovall said.

The trigger for last week's turnaround may have been expectations that longer-term interest rates will rise, according to strategists at Morgan Stanley. Low rates often act like steroids for stocks, encouraging investors to pay higher prices for stocks relative to corporate profits, which can benefit high-growth stocks in particular.

The yield on the 10-year Treasury has returned to 0.68%. That’s down from 0.72% late Friday, but it’s notably higher than the 0.53% it was offering at the end of July.

Tesla has been one of the brightest examples of Big Tech’s furious movements, and it surged 74.1% in August alone. It slumped 19% Tuesday amid disappointment that it won't be joining the S&P 500 anytime soon.

The company behind the S&P 500 announced on Friday the inclusion of several companies in the benchmark index, including Etsy. Some investors thought Tesla would be among them, which can create huge bouts of buying as index funds automatically fold the stock into their portfolios. Teradyne and Catalent will also join the S&P 500 on Sept. 21.

Tuesday was the first day of trading for Wall Street after Monday’s closure for Labor Day.

Beyond the tech stock slump, other worries are also hanging over the stock market, which had been setting record highs just last week.

Pessimism is rising that Democrats and Republicans in Washington will be able to find a deal to send more aid to unemployed workers and an economy still struggling amid the pandemic. Investors have been largely assuming that a deal would eventually pass, but recent talks between government leaders have yielded no progress.

Riki Ogawa at the Asia & Oceania Treasury Department at Mizuho Bank in Singapore warned that plenty of other uncertainties remained, such as President Donald Trump’s comments about “decoupling” the U.S. economy from China, as the presidential campaign heats up.

The relationship between the world’s two largest economies has been on edge for years, and all the uncertainty threatens to exacerbate the global economy’s already shaky standing.

“We appear to be short on clarity,” said Ogawa.

Energy stocks had some of Wall Street's sharpest drops as the price of oil tumbled. Apache lost 10.8%, and Occidental Petroleum fell 9.7% after benchmark U.S. crude sank $3.01 to $36.76 per barrel. Brent crude, the international standard, lost $2.23 to $39.78.

But the losses were widespread across the market, with about 90% of the stocks in the S&P 500 lower.

Among the few gainers was General Motors. It rose 8% after it said it's taking an ownership stake in electric-vehicle company Nikola. GM will also engineer and build Nikola’s Badger hydrogen fuel cell and electric pickup truck as part of the partnership.

Nikola surged 39.2%, on track for its best day since it doubled on June 8.

European stock markets sank, following modest gains in Asia.

___

AP Business Writer Yuri Kageyama contributed.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Utilities
© Copyright 2021 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Chipping in? Trump may put up his own cash on reelection
President Donald Trump is putting out the word that he is considering spending as much as $100 million of his own fortune on his reelection effort as campaign officials try to buck up key supporters and donors in the face of daunting polling numbers and other bad news
3:25PM ( 15 minutes ago )
Technology stocks keep stumbling; Nasdaq down 9% in 3 days
Big tech stocks are continuing their Icarus-like flight path, and more sharp declines for them are dragging Wall Street toward a third straight loss on Tuesday
3:19PM ( 21 minutes ago )
GM to make electric vehicle, supply batteries for Nikola
General Motors formed its second major electric vehicle partnership in less than a week, this time a $2 billion deal with startup Nikola
3:15PM ( 25 minutes ago )
Associated Press (AP)
McConnell proposes 'targeted' virus aid, Dems say not enough
Senate Majority Leader Mitch McConnell says the Senate will vote on a trimmed-down Republican coronavirus relief package, though it has a slim chance of passage in the face of Democrats’ insistence for more sweeping aid
2:34PM ( 1 hour ago )
Trump claims environmental progress, but he's weakened rules
President Donald Trump is out to claim the mantle of environmental steward as he highlights conservation and restoration projects in the critical battleground of Florida
2:32PM ( 1 hour ago )
Technology stocks keep stumbling; Nasdaq down 8% in 3 days
Big tech stocks are continuing their Icarus-like flight path, and more sharp declines for them are dragging Wall Street toward a third straight loss on Tuesday
2:23PM ( 1 hour ago )
AP Business
Virus lockdown plunges South Africa deeper into recession
Official statistics show that South Africa’s economy has sunk deeper into recession, with its gross domestic product for the second quarter of 2020 plummeting by 51%, largely as a result of COVID-19 and the country’s strict lockdown
10:35AM ( 5 hours ago )
EU, UK blame each other over deadlocked post-Brexit talks
The U.K. and the European Union have blamed each other in their increasingly acrimonious post-Brexit trade discussions that could be weeks from collapse
10:30AM ( 5 hours ago )
Lavrov: Russia ready to help ease Turkey-Greece tension
Russia's foreign minister says Moscow is ready to step in and help ease rising tensions over Turkey's search for energy reserves in the eastern Mediterranean and rejected any actions that could lead to further escalation
10:24AM ( 5 hours ago )
AP Business - Economy
Asian shares mostly higher as US set to reopen from holiday
Asian shares are mostly higher after European stocks rallied and the U.S. markets were closed for the Labor Day national holiday
11:01PM ( 16 hours ago )
Stocks rally in Europe, US trading closed for holiday
European stock markets have closed with strong gains after a more subdued day in Asia
12:07PM ( 1 day ago )
Russian delegation in Syria to expand trade, economic ties
Russia's deputy prime minister says a senior Russian delegation in Damascus has discussed the expansion of economic and trade cooperation between the two countries to circumvent U.S. sanctions
11:56AM ( 1 day ago )
AP Business - Financial Markets
The Latest: Michigan grad students strike over virus issues
Graduate students who teach classes were on strike at the University of Michigan over in-person instruction during the coronavirus pandemic
11:44AM ( 3 hours ago )
As California burns, the winds arrive and the lights go out
California's largest utility has shut off power to 172,000 customers to prevent its power lines and other equipment from sparking wildfires
10:33AM ( 5 hours ago )
The Latest: Britain faces rising virus cases at 3,000 daily
The British government is facing pressure to keep a lid on coronavirus infections after a sharp spike in new cases across the U.K. The figures released Monday showed nearly 3,000 new coronavirus cases for the second day running
9:52AM ( 5 hours ago )
AP Business - Industries
Greece to boost military amid tension with neighbor Turkey
Greece says it will be bolstering its military with new arms, more personnel and by developing the country’s defense industry
2:49PM ( 1 day ago )
Hospital: Russia's Alexei Navalny out of coma, is responsive
The German hospital treating Russian opposition leader Alexei Navalny says he has been taken out of an induced coma and is responsive
12:09PM ( 1 day ago )
Merkel won't rule out halting pipeline over Navalny
Chancellor Angela Merkel’s office has indicated that she might be willing to rethink the fate of a German-Russian gas pipeline project over the Navalny case
7:15AM ( 1 day ago )
AP Business - Utilities
Chipping in? Trump may put up his own cash on reelection
President Donald Trump is putting out the word that he is considering spending as much as $100 million of his own fortune on his reelection effort as campaign officials try to buck up key supporters and donors in the face of daunting polling numbers and other bad news
3:25PM ( 15 minutes ago )
GM to make electric vehicle, supply batteries for Nikola
General Motors formed its second major electric vehicle partnership in less than a week, this time a $2 billion deal with startup Nikola
3:15PM ( 25 minutes ago )
California fires bring more chopper rescues, power shutoffs
Helicopters are rescuing more people from the California wildfires as flames chew through bone-dry terrain after a scorching Labor Day weekend
3:13PM ( 27 minutes ago )
Belarus activist resists effort to deport her to Ukraine
A leading opposition activist in Belarus is being held after she resisted attempts by to deport her to Ukraine as part of a crackdown on protests of authoritarian President Alexander Lukashenko
3:13PM ( 27 minutes ago )
Computer glitches disrupt classes as schools return online
The millions of American youngsters returning to online classes on Tuesday are facing technical glitches and other headaches that have plagued remote learning since the onset of the COVID-19 pandemic
3:11PM ( 29 minutes ago )