US STOCKS-Nasdaq tumbles as investors dump tech megacaps

The Nasdaq index fell more than 2% on Tuesday as steep declines in megacap growth stocks led Wall Street below record trading levels, with investors seeking shelter in more defensive parts of the market.

Reuters | Washington DC | Updated: 05-05-2021 09:29 IST | Created: 04-05-2021 19:54 IST
US STOCKS-Nasdaq tumbles as investors dump tech megacaps
Representative image Image Credit: Wikimedia Commons

The Nasdaq index fell more than 2% on Tuesday as steep declines in megacap growth stocks led Wall Street below record trading levels, with investors seeking shelter in more defensive parts of the market. Highly valued technology companies including Microsoft Corp, Alphabet Inc, Apple Inc, Inc and Facebook Inc fell between 0.6% and 2.4%.

All of the 11 major S&P 500 sectors fell in early trading, with technology, communication services and consumer discretionary falling more than 1.5% each. The defensive consumer staples, utilities and real estate sectors fell the least.

"When you're at all-time highs and the market pulls back, the ones that tend to lead to the downside are often the high-beta stocks such as technology," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. "When we have pauses or pull backs people tend to move out of growth stocks into more defensive names."

Copious stimulus measures, speedy vaccination drives and the Federal Reserve's accommodative policy stance have spurred a strong rebound in the U.S. economy and pushed Wall Street to record highs this year. The so-called "pandemic winners", however, have recently started to fall out of favour. U.S. and European stock markets also saw a sudden 0.5% drop in hefty volumes around 7:30 a.m. ET on Tuesday, leaving traders scratching their heads and one calling it a "micro flash crash".

At 10:03 a.m. ET the Dow Jones Industrial Average was down 256.42 points, or 0.75%, at 33,856.81, the S&P 500 was down 45.00 points, or 1.07%, at 4,147.66, and the Nasdaq Composite was down 280.58 points, or 2.02%, at 13,614.54. Among other stocks, CVS Health Corp gained 2.8% on reporting a first-quarter profit above analysts' estimates and raising its 2021 profit forecast.

First-quarter earnings have been largely upbeat. Average profits at S&P 500 companies are expected to have risen 46% in the quarter, compared with forecasts of a 24% growth at the start of April, according to IBES data from Refinitiv. Investors also waiting for data through the week, including the Labor Department's non-farm payrolls data, slated to be released on Friday. The report is expected to show a rise in job additions in April.

Declining issues outnumbered advancers for a 3.19-to-1 ratio on the NYSE and a 5.83-to-1 ratio on the Nasdaq. The S&P index recorded 42 new 52-week highs and no new low, while the Nasdaq recorded 45 new highs and 59 new lows.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)



Blockchain in Healthcare: Opportunities and challenges

The use of blockchain in healthcare is a relatively new innovation with many of its uses still being explored and related technologies being developed, improved, and scaled. ...

Debate surrounding vaccine passports and development misses bigger picture

... ...

Blockchain vs IOTA: Looking for a better alternative

... ...

For stability, Iraq needs to crack down on corruption

... ...


Latest News

White House, seeking to boost vaccinations, touts free Uber, Lyft rides

The White House on Tuesday announced a series of steps aimed at boosting U.S. COVID-19 vaccination rates, including a partnership with ride-hailing services Uber and Lyft, as it seeks to achieve President Joe Bidens July 4 reopening deadlin...

Meghalaya reports 9 more COVID deaths, 450 fresh cases

Nine more people succumbed to COVID-19 in Meghalaya on Tuesday, taking the death toll to 242, while 450 new cases pushed the tally to 20,579, a senior health department official said here.The state currently has 3,297 active cases.Altogethe...

UPDATE 1-Canada promises two Arctic ice breakers in pre-election job boost

The Canadian government on Thursday promised to build two Arctic ice breakers and create hundreds of jobs in two politically influential provinces that will help decide an election considered likely this year. The ruling Liberals, citing th...

German watchdog bans Facebook from processing WhatsApp data

A German privacy watchdog banned Facebook on Tuesday from gathering data on users of its WhatsApp chat app, citing an update to its privacy policy that it said breaches stringent European data protection rules.Hamburgs data protection commi...

Give Feedback