Dow tanks 808 points as tech-stock exodus drives worst day since June
Summary List Placement
- US equities tanked the most since June on Thursday as investors dumped highly valued tech stocks.
- Every one of the S&P 500’s 11 sectors plunged throughout the day. Energy stocks suffered the least damage with a roughly 1% drop, while the information technology sector plummeted about 6%.
- A lower-than-expected weekly jobless-claims reading wasn’t enough to lift stocks. New claims totaled 881,000 in the week that ended Saturday, beating the economist estimate of 950,000.
- Oil tumbled on fears that Iraq may delay production cuts and keep supply well above demand. West Texas Intermediate crude slid as much as 3.1%, to $40.22 a barrel.
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US stocks tanked the most in three months on Thursday as investors sold off high-flying tech stocks.
The Dow Jones industrial average suffered its worst single-day loss since late June, while the S&P 500 saw its biggest drop since early that month. Meanwhile, the tech-heavy Nasdaq 100 experienced its biggest decline since March.
The FAANG coalition — Facebook, Apple, Amazon, Netflix, and Google-parent Alphabet — plummeted after rallying through the start of the month and enjoying historically expensive valuations. Other market darlings including AMD, Nvidia, and Zoom stumbled through the day. By the end of the day
Here’s where US indexes stood at the 4 p.m. ET market close on Thursday:
- S&P 500: 3,455.06, down 3.5%
- Dow Jones Industrial Average: 28,292.73, down 2.8% (808 points)
- Nasdaq composite: 11,458.10, down 5%
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“There were no major headlines or obvious triggers for the plunge, but it’s left investors wondering if the day’s drop signals another historic market event, or just a little in-flight turbulence,” Lindsey Bell, chief investment strategist at Ally Invest, said.
Stimulus uncertainties, the presidential election, budget talks, and earnings all stand to make the next few months “a bumpy ride,” she added.
Neglected sectors initially gained before following the market lower. JPMorgan and Bank of America outperformed the market slump after Deutsche Bank upgraded both stocks to “buy” from “hold.”
Thursday’s decline came despite weekly jobless claims falling by more than anticipated. Claims for unemployment insurance sank to an unadjusted 881,000 in the week that ended Saturday, according to the Labor Department. Economists expected a reading of 950,000.
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Continuing claims, which track Americans receiving unemployment benefits, totaled 13.3 million for the week that ended August 22, falling from the prior week’s revised figure.
Elsewhere on the economic-data front, the Institute for Supply Management’s gauge of the US services industry showed recovery slowing in August. The index fell to 56.9 last month from 58.1, with a drop in new orders fueling most of the decline.
Cboe’s VIX index — Wall Street’s preferred volatility gauge — rocketed to its highest level since June amid the frothy price action. The metric tracks futures for the S&P 500 to measure the degree of stocks’ price swings.
Tesla continued its downward spiral. The automaker touched record highs as recently as Tuesday but tumbled as much as 15% the following day after its largest outside shareholder trimmed its stake.
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Gold fell as low as $1,922 per ounce before paring some losses.
Oil sank amid worries that Iraq could delay production cuts for two months. West Texas Intermediate crude slid as much as 3.1%, to $40.22 a barrel. Brent crude, the international benchmark, slid 2.9%, to $43.15 a barrel, at intraday lows. Both contracts retraced some losses but still failed to turn positive for the session.
The stock market dip follows a 455-point surge for the Dow in Wednesday trading. Equities leaped after Treasury Secretary Steven Mnuchin urged Congress to pass additional stimulus. The S&P 500 and the Nasdaq composite notched record highs through the session.
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