In this June 16, 2020, file photo, a sign for a Wall Street building is shown in New York. (AP Photo/Mark Lennihan, File)
By Ken Sweet and Damian J. Troise
Updated 4:35 pm ET
Wall Street's euphoria took a break Thursday, as steep losses in technology stocks dragged the rest of the market down with them.
It was the biggest decline for the U.S. stock market since early June when investors were dealing with a surge of coronavirus infections in places like Florida, Texas, and Arizona. There seemed to be no explicit catalyst for the sell-off, with economic data coming in roughly where the market had expected and no companies issuing foreboding warnings.
That said, the market felt due for a breather, investors said. Both the S&P 500 and Nasdaq hit record highs just the day before. Prior to Thursday, the S&P 500 had risen nine out of the previous 10 days.
Big Tech stocks like Apple, Amazon, and Facebook have made massive gains this year. Investors have been betting those companies would continue posting huge profits as people spend even more time online with their devices. Market watchers have been questioning recently whether those gains were overdone. Apple is still up 64.7 percent for the year, and Amazon is up 82.3 percent.
"There's really very little to justify (these big stocks' upward move) other than euphoria," said Mark Hackett, chief of investment research at Nationwide.
Hackett also noted the market has "embedded very optimistic assumptions" about the virus's impact on the economy, as well as on prospects for Congress and the White House coming up with another economic relief package.
The government reported that the number of Americans who applied for unemployment benefits fell last week to 881,000, slightly better than what economists had expected. That said, companies are still letting workers go at numbers well above those seen in the Great Recession, meaning the jobs picture remains still extremely bleak despite recent improvements.
The stock market has rallied this spring and summer after plunging in March as investors realized the economic toll the coronavirus pandemic was going to cause. Most of the rally has been on strong performances from tech stocks, but also a hope that the worst of the pandemic is in the past, despite rising infections in schools and the possibility of a second surge of infections in the fall. Huge amounts of support from the Federal Reserve and Congress have also helped bolster the economy.
Investors will be paying close attention Friday when the Labor Department releases its August job report. Economists surveyed by FactSet forecast that the U.S. economy created 1.4 million jobs in August, but that would be down from 1.74 million jobs in July. Tens of millions of Americans remain unemployed however, as seen by this week's unemployment benefits numbers.
If the jobs numbers do not deliver, it's unlikely the stock market will rally much higher from here, analysts said.
The Dow Jones Industrial Average fell 807.77 points, or 2.8 percent, to 28,292.73. It was briefly down 1,000 points earlier.
The S&P 500 index lost 125.78 points, or 3.5 percent, to close as 3,455.06. The technology-heavy Nasdaq dropped 598.34 points, or 5 percent, to 11,458.10.
Technology stocks, which account for a significant chunk of the U.S. stock market's value these days, fell broadly. Apple dropped 8 percent, Amazon lost 4.6 percent and Facebook gave back 3.8 percent. Semiconductor stocks also fell sharply. Nvidia, Qorvo, and Advanced Micro Devices fell 8 percent or more. Even with Thursday's drop, Nvidia is still the biggest gainer in the S&P 500 so far this year.
The stocks that were doing better than the rest of the market were companies whose stocks have been beaten down this year: travel companies and airlines. Carnival Corp rose 5.2 percent, Norwegian Cruise Lines rose 3.8 percent and Royal Caribbean climbed 2.7 percent.
Nvidia on Wednesday became the first public company to reach a market capitalization of $5 trillion. The ravenous appetite for the Silicon Valley company’s chips is the main reason that the company’s stock price has increased so rapidly since early 2023.
Chris Williamson, Chief Business Economist at S&P Global, breaks down September’s CPI print and inflation trends, explaining what it means for markets.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
