Tech sell-off resumes; Nasdaq down more than 8% in 3 days

NEW YORK (AP) — Big tech stocks are continuing their Icarus-like flight path, and more sharp declines for them are pulling Wall Street lower in early Tuesday trading.

The S&P 500 was down 1.9%, highlighted by the 2.7% tumble for tech stocks within the index. Apple sank 2.9% and Microsoft fell 2.8%.

The Dow Jones Industrial Average was down 474 points, or 1.7%, at 27,658, as of 9:57 a.m. Eastern time. The Nasdaq composite, which is full of many tech stocks, dropped 2.5% and is down 8.5% since Wednesday’s 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 nearly 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 buying activity for stock options of Big Tech companies goosed the gains even further recently. With certain kinds of stock 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.

The trigger for the 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 benefits high-growth stocks in particular.

The yield on the 10-year Treasury has returned to 0.66%. 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 surged 74.1% in August alone. Its slump on Tuesday came with disappointment that it won’t be joining the S&P 500 anytime soon. The company behind the benchmark index announced the inclusion of several companies in the S&P 500, including Etsy. Some investors thought Tesla would be among them, which can create huge bouts of buying as index-fund investors include the stock in 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.

Panorama Hispano is the regional news and information newspaper for Hispanic and other diverse communities.

US Hispanics are now the largest ethnic minority in the United States numbering 54.2 million as of July 2014. Serving: Buffalo, Rochester, Fredonia, Niagara Falls, NY and Erie, PA. Outside our Market area: Visit our affiliate at: http://www.impremedia.com/

Contact us: Contact@PanoramaHispanoNews.com

Featured News

May 18, 2022
Top Cruise and ‘Top Gun: Maverick’ touch down in Cannes

CANNES, France (AP) — Tom Cruise mania descended Wednesday in Cannes where the actor made a whirlwind appearance at the […]

Read More
May 17, 2022
In Buffalo, Biden condemns racism, mourns new victims

BUFFALO (AP) — President Joe Biden on Tuesday condemned the poison of white supremacy and said the nation must “reject […]

Read More
May 16, 2022
Williams has 27, Celtics make 22 3s in Game 7 rout of Bucks

BOSTON (AP) — In the fog of the Celtics’ Game 5 loss to Milwaukee that dropped his team into a […]

Read More

popular categories

Copyright © 2022 Panorama Hispano News. All Rights Reserved.
crossmenuchevron-downmenu-circlecross-circle
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram