Tech stocks lead market rout; Nasdaq plunges 3.1%
Trader Peter Tuchman, right, works on the floor of the New York Stock Exchange on Thursday, April 10, 2014. Anxiety about pricey technology stocks returned with a vengeance to Wall Street Thursday, sending the Nasdaq down more than 3.0 percent and sparking deep declines in the broader stock market. AP/RICHARD DREW
NEW YORK—Anxiety about pricey technology stocks returned with a vengeance to Wall Street Thursday, sending the Nasdaq down more than 3.0 percent and sparking deep declines in the broader stock market.
The tech-rich Nasdaq Composite Index tumbled 129.79 points (3.10 percent) to 4,054.11, the biggest single-day drop in percentage terms since November 2011.
The Dow Jones Industrial Average sank 266.96 (1.62 percent) to 16,170.22, while the broad-based S&P 500 fell 39.10 (2.09 percent) to 1,833.08.
Although tech names led Thursday’s move, some analysts described the sell-off as fairly indiscriminate.
“People were across the board reducing equity exposure,” said Michael James, managing director of equity trading at Wedbush Securities. “Lower prices were bringing out more sellers.”
“The market is on very shaky legs,” James added.
The rout followed a two-day rally that picked up momentum Wednesday when the minutes of the last Federal Reserve policy meeting suggested no support for an early rise in interest rates.
It indicated the selling pressure that has permeated the market over the last month continues to lurk.
Among the biggest losers were Netflix (-5.2 percent), Facebook (-5.2 percent) and Tesla Motors (-5.9 percent). Larger tech firms also fell, including Google (-4.1 percent), Amazon (-4.4 percent) and Apple (-1.3 percent).
Biotech firms continued to be among the hardest hit, including Celgene (-5.0 percent) and Gilead Sciences (-7.3 percent.)
Memories of Nasdaq’s plunge in the collapse of the dot.com bubble in 2000 loomed, but analysts generally see today’s conditions as different.
“It’s certainly a valuation correction,” said Jack Ablin, chief investment officer at BMO Private Bank.
“We’ve got lots of liquidity, but we have a stretched market,” Ablin said. “Probably the best solution would be to have earnings and revenues rise.”
Ablin said the market has turned specially hard against companies with a high ratio of stock valuation to earnings.
Banking stocks were hammered, with JPMorgan Chase falling 3.2 percent, Wells Fargo sinking 2.8 percent and Bank of America dropping 3.0 percent.
Analysts are closely eyeing earnings season, which begins in earnest Friday with reports from JPMorgan Chase and Wells Fargo. But many of the most closely watched tech companies do not report earnings until later in April.
Bond prices rallied. The yield on the 10-year US Treasury fell to 2.65 percent from 2.68 percent on Wednesday. The yield on the 30-year tumbled to 3.52 percent from 3.57 percent. Bond prices and yields move inversely.
