American market collapsed from record highs, investors fix profits
On Thursday, shares of tech giants fell on the basis of trading, dragging stock indices with them. Investors see an opportunity to lock in profits at market highs.
The hi-tech Nasdaq Composite, which has set new all-time highs in the past three months, experienced its worst trading day since early June yesterday as tech stocks, which propelled the market higher, pulled back noticeably.
The Dow Jones Industrial Average fell 807.77 points, or 2.78%, to 28,292.73. S&The P 500 shed 125.78 points, or 3.51%, to 3455.06. Nasdaq Composite falls 598.34 points, or 4.96%, to 11,458.10.
The Wall Street fear indicator VIX crossed the 200-day moving average and reached its highest level in several weeks. He closed with growth by 7 points, rising to 33.60.
Companies that drove US markets to record highs – Apple, Amazon, Alphabet, Microsoft and Facebook – fell 4-8%.
Another key Nasdaq component, Tesla Inc, fell 9% on Thursday after falling sharply in the previous two sessions. Shares of another tech giant, Nvidia, lost 9.3%.
8% drop in Apple shares means a $ 150 billion decrease in the company‘s capitalization.
The sell-off came after the release of mixed US economic data on Thursday, which included a report showing slower service sector growth in August, stronger-than-expected decline in new jobless claims, record job cuts this year and unexpected large trade deficit in July.
While the latest weekly initial jobless claims fell more-than-expected, they remain high amid growing fears that employment growth may stall without further economic stimulus..
Financial managers called the sale a constructive step.
«I definitely think this is just a healthy pullback, – stated Bryn Talkington, Managing Partner of Requisite Capital Management. The Dallas-based company has $ 856 million in assets, according to Factset..
Decrease in index Nasdaq was partially driven by quotes from Zoom and Tesla. Shares of both companies, whose valuations soared to three-digit numbers this year, were trading near the correction zone. Talkington believes these shares have yet to fall, although investors will come back later..
«I think this is just a reminder that gravity exists not only in nature, but also in the stock market. Nasdaq may still roll back 10-15%», – said Talkington.
Karen Firestone, Chairman and Chief Executive Officer of Aureus Asset Management, believes the Nasdaq 100 is time to take a breather after rising roughly 18% for six weeks «madness». Many major players traded 70% or more above their 200-day moving averages.
«This is extreme, she says. – This is an opportunity for people to very quickly sell stocks on which they made a lot of money, and this step has much less to do with the economic recovery than with the price level». Aureus manages $ 3.8 billion in assets.
«(Investors) are in love with tech stocks, and they need more to stop loving them», – considers Mike Siegmont, Head of Trade and Research, Harvest Volatility Management in New York.
Sebastian Lebern, a senior portfolio manager at Boston Private in Florida, said the drop was «just by rotation» technology stocks: «I don’t think this is something sinister», – he noted.
Some participants are confident that investors have become too optimistic.
«Think about the growing number of risks that the market has been oblivious to in the past couple of months, said Emily Roland, co-head of investment strategist John Hancock Investment Management. – There are 60 days left before the elections. This could be an area where investors are a little scared.».
She added: «Looking at today’s data, we can say that the market had the opportunity to grow and did not pay attention to the macro environment, which, yes, is improving, which is encouraging, but the economy remains fragile.».