U.S. stocks nosedive as tech saps rally; Dow slides more than 800 points

The technology giants were among the hardest hit in the selling frenzy. Apple, the most highly valued publicly traded company in the United States, shed more than 6 percent. But the iPhone-maker still retained its singular distinction of being worth more than $2 trillion, highlighting its staggering ascent the past year. The five other technology companies whose dramatic growth has buoyed the broader market — Facebook, Microsoft, Alphabet, Amazon and Netflix — all lost between 3 and 6 percent.

But their steep declines underscored just how remarkably their share prices recovered from the lows of March, when the coronavirus was first taking hold of the country.

Nicole Tanenbaum of Chequers Financial Management said it is not unusual to see stocks readjust after such a massive run, and that it is healthy for markets to hit the pause button following months of nearly uninterrupted gains.

“The market is taking a moment to catch its breath,” she said. “As investors continue to assess uncertainties around the latest covid news, the economy, potential for a vaccine, and the election, we should expect more bumps in the road ahead.”

Investors have been anticipating another round of emergency coronavirus relief from the federal government. The initial wave of funds helped lift vulnerable Americans as the pandemic battered the economy. But negotiations between the White House and Congress have stalled. And last month, tens of millions of people lost $600 in enhanced weekly unemployment benefits.

“Concerns about whether an adequate fiscal stimulus package could come to fruition weighed down on stocks today, especially tech stocks which have had such a strong run up,” said Kristina Hooper, chief global market strategist at Invesco. Tech investors in particular are grappling with the threat of heightened regulation next year and beyond. The market is also reacting to concerns of a potentially contested election, she said.

Michael Farr, president of Farr, Miller & Washington, said that in a normal market, investors could expect a 10 to 15 percent decline, which would probably lead to a subsequent rebound and a return to recent stock market highs. But the extraordinary intervention from the Federal Reserve and from Congress has limited how far Wall Street can fall, he said. “My gut says this one will not be long or deep.” The sell-off, he added, could ring the alarm for Congress, pressing elected leaders to vote on an extended rescue package that both political parties could benefit from.

The Labor Department reported that more than 800,000 new claims for unemployment insurance were filed last week, the latest indicator that the pandemic continues to pummel the labor market. Altogether, 29 million people are receiving some form of unemployment insurance, an increase of 2 million from the prior week. On Friday, the Bureau of Labor Statistics will release the August jobs data. Investors and policymakers pay particular attention to the monthly report for signs of where the economy is going. In July, the U.S. added 1.8 million jobs, dropping the unemployment rate to 10.2 percent, its third straight month of declines.

As many businesses and workers struggle to keep operations running, the virus itself remains a persistent threat. At least 183,170 Americans have died of covid-19-related illness. And more than 6 million people have been infected. Both reported deaths and confirmed cases have fallen from their respective peaks in April and July, but tens of thousands of Americans are still contracting the virus every day.

The U.S. Centers for Disease Control and Prevention has told state and local health officials to prepare for the distribution of a potential vaccine for health-care workers and other high-risk groups as early as Nov. 1. Three vaccine makers are conducting the last phase of clinical trials before they can seek approval from regulators.

Heading into Thursday’s dismal session, the stock market was blazing hot. On Wednesday, the Dow rose 458 points, inching within 1.5 percent of its all-time high of 29,551, set Feb. 12. The S&P 500 posted its 22nd record of the year, reaching 3,580.84. And the Nasdaq notched its 43rd record finish, climbing to 12,056.44.

The three major indexes had a stunning rise in August, which marked the end of the bear market. Both the S&P 500 and the Dow turned in their best performances since the mid-1980s, gaining 7 percent and 7.6 percent, respectively. And the Nasdaq reached even higher, surging 9.6 percent for its highest August return since 2000.

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