Tech Meltdown Drags Wall Street Lower
Stocks on Wall Street fell Tuesday for a third-straight session, led by another sharp sell-off in shares of the same giant tech companies that had led the market back into record territory last month.
The Nasdaq composite tumbled more than 4 percent, in the latest of a series of declines for technology stocks that began last week as investors abruptly began to recalibrate their appetite for the previously high-flying shares. The SP 500 fell about 2.8 percent.
The trigger for the sell-off remains at issue. Late last week the Financial Times reported that SoftBank, a Japanese conglomerate that has a history of making outsize bets, had been a large buyer of options linked to the rising tech stocks, helping supercharge both the tech sector, and the broader stock market, in August. SoftBank declined to comment to The New York Times.
But the idea that a single large buyer could have accounted for the recent momentum of giant tech stocks — Apple alone was up more than 20 percent last month — fed the worry among some investors and analysts that the tech rally had gone too far too fast.
“We’ve seen these incredible run-ups,” said JJ Kinahan, chief market strategist at TD Ameritrade. “People are starting to question their valuation.”
On Tuesday, Apple fell more than 6 percent, and Microsoft dropped more than 5 percent. Amazon, Facebook and Google’s parent, Alphabet, were also sharply lower.
Those companies have become crucial bellwethers of the broader market this year. Since the coronavirus crisis hit in March, investors had flocked to buy their shares, convinced that their already dominant positions in the American economy would only grow stronger as lockdowns resulted in more work from home and less spending elsewhere.
As their market values surged, so did their influence over benchmarks like the SP 500. At the end of last week, these five stocks accounted for some 24 percent of the index, according to Goldman Sachs analysts.
With Tuesday’s decline, the Nasdaq breached what market watchers call a correction — a decline of more than 10 percent from its last high. That’s an arbitrary threshold but is often taken as a signal that investors have turned more pessimistic about the markets. The SP 500 is down about 7 percent from its highest point, reached on Wednesday.
Oil futures also fell sharply on Tuesday, reflecting concerns about supply of crude as the summer driving season in the United States ends and with the Organization of Petroleum Exporting Countries, which slashed oil production in May, now adding to output.
Shares of energy companies followed the price of crude lower, with Halliburton, Marathon Oil, and Diamondback Energy among the worst performers on the SP 500.
Article source: https://www.nytimes.com/live/2020/09/08/business/stock-market-today-coronavirus