Wall Street plunges as economic data indicate slowing recovery; tech stocks falter

Wall Street plunges as economic data indicate slowing recovery; tech stocks falter

Stocks took a steep dive Thursday in the worst day for Wall Street since June — just days after its best August performance since the 1980s.

Following a volatile day when the Dow Jones Industrial Average plunged by 1,000 points at one point, the blue-chip index ended the day down by 810 points. The S&P 500 index closed with a decline of 3.5 percent, and the Nasdaq Composite plunged by 4.96 percent.

The tech sector, which has spearheaded much of the market’s meteoric rise since the coronavirus pandemic began, led Thursday’s pullback as investors cashed in their highly valued tech stocks.

Apple marked its worst day since March, with shares down by more than 7 percent. Amazon, Salesforce, Alphabet and Microsoft all had declines in the 5 percent range.

Facebook fell by 5.2 percent after it announced that it would ban all new political ads from its platform for the week leading up to Election Day, Nov. 3, and that it would remove posts that seek to suppress or discourage voting.

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“So far, what I’ve seen is a perfectly natural, healthy pullback in a bull market. Things were just getting frothy in general,” Ed Keon, chief investment strategist at QMA, told CNBC. “The market’s gone straight up in the most powerful rally I can remember in my career. At the end of the day, does the sell-off get really bad? Probably not.”

Market watchers were parsing a variety of economic metrics, including Thursday’s weekly jobless claims data, which beat analysts’ expectations, revealing that 881,000 people filed for first-time unemployment benefits during the last week of August. While the number is the lowest weekly total since the pandemic began, it is still four times the pre-pandemic figure. Continuing claims indicate that 13.3 million people are still filing for ongoing benefits.

Data from the Commerce Department also showed that the U.S. trade deficit soared to $63.6 billion in July, the highest level in 12 years. The Congressional Budget Office said Wednesday that the federal debt is expected to outpace the country’s gross domestic product by the end of 2021.

After the slew of disappointing data, investors now turn their focus to Friday’s all-important monthly jobs report, released by the Bureau of Labor Statistics. Economists predict that the national unemployment rate will fall into the single digits for the first time since February, declining from 10.2 percent to around 9.8 percent. Before the pandemic hit, the rate was at 3.5 percent, the lowest in five decades.

In the meantime, House Democrats remain at loggerheads with the White House over the next stimulus aid plan, with no clear indication that another package will pass before the election. While Treasury Secretary Steven Mnuchin indicated in testimony Monday that he is “willing to sit down at the negotiating table,” House Speaker Nancy Pelosi, D-Calif., said Tuesday that there are still “serious differences.”

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