Tech stocks continue to pull back, dragging market lower

NEW YORK (AP) — Big technology stocks are opening sharply lower again on Wall Street, continuing a pullback that began last Thursday and Friday. The tech-heavy Nasdaq index dropped another 2.9% in the early going on Tuesday, the first day of trading after the Labor Day holiday in the U.S. The S&P 500 was down 1.8%. The deflation in high-flying tech stocks came after an eye-popping rally this year for the sector that many market watchers said was overblown. The Nasdaq is still up 22% this year versus a 4% gain for the S&P 500. Crude oil prices fell sharply, and Treasury yields dropped.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.

European stocks mostly edged lower on Tuesday after small gains in Asia, while Wall Street appeared set to slip when it reopens after the Labor Day long weekend.

Investors are focusing on uncertainties over the coronavirus pandemic and hopes for a vaccine. Attention is now on how Wall Street might pick up after the holiday break, given the decline that came last week after months of surging prices.

Dow futures were down 0.2% and the S&P 500 futures 0.8% lower. In Europe, which had rallied on Monday, France’s CAC 40 fell 1.3% to 4,987, while Germany’s DAX was down 0.9% at 12,983. Britain’s FTSE 100 shed 0.2% to 5,924.

Japan’s benchmark Nikkei 225 gained 0.8% to finish at 23,274.13. Australia’s S&P/ASX 200 added 1.1% to 6,007.80. South Korea’s Kospi gained 0.7% to 2,401.91. Hong Kong’s Hang Seng edged up 0.1% to 24,624.34, while the Shanghai Composite gained 0.7% to 3,316.42.

“Traders and investors alike may slowly but surely come around to the idea that last week’s market rout was tech sector-specific, rather than any real change in underlying sentiment,” said Stephen Innes, chief global markets strategist at AxiCorp.

“There was nothing ‘fundamental’ behind last week’s equity sell-off, but it will most certainly take a while to clear all the option-market after-shocks,” he said.

Also Tuesday, the Japanese government reported that the nation’s economy shrank at an even worse rate in the April-June quarter than initially estimated. The Cabinet Office reported Japan’s seasonally adjusted real gross domestic product contracted at an annualized rate of 28.1%, worse than the record 27.8% figure given last month.

The coronavirus pandemic, which has people staying home, restaurants and stores empty or closing, and travel and tourism nose-diving, has hurt all the world’s economies and many companies.

In Europe, another round of Brexit trade talks is scheduled in London for later in the day. On Monday, the European Union warned the British government that any attempt to renege on commitments made ahead of its departure from the bloc earlier this year could put at risk the hard-won peace in Northern Ireland. Britain left the bloc on Jan. 31, but the two sides are in a transition period that ends at the end of this year and are negotiating their future trade ties.

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 Asian region depends heavily on a healthy Chinese economy, and trade with the U.S., as well as with China.

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

Benchmark U.S. crude fell $1.78 to $37.99 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 98 cents to $41.03 per barrel.

The dollar stood unchanged at 106.27 Japanese yen. The euro inched down to $1.1803 from $1.1817. ___

Yuri Kageyama is on Twitter

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