As they drove Wall Street to record highs, so tech giants led by Apple, Tesla and Microsoft drove it lower on Thursday in the biggest one-day sell-off since June.
US stocks closed down: the Dow ended with a loss of 807.77 points, or 2.8%, at 28,292.73, after dropping more than 1,000 points at its session low.
The S&P 500 lost 125.78 points lower, down 3.5%, at 3,455.06. The Nasdaq tumbled 598.34 points, or nearly 5%, to end at 11,458.10.
The falls were the biggest one-day drops for all three indexes since June.
The S&P 500’s index tech sector fell 5.8%, while the communications services and consumer discretionary sectors each dropped more than 3%. The energy sector, in contrast, fell just 0.7%, but financials shed 1.6%.
Apple’s shares slid 8% — wiping more than $US150 billion from the iPhone maker’s value — while Microsoft fell 6% and Tesla fell 9%. Amazon shares fell more than 4.5%.
Tesla shares are now down 20% since their post five for one split high on Monday (US502) while Apple shares have lost more than 10% since their four for one split the same day ($US137.98).
That puts the shares in correction territory while Tesla shares are now in a bear market.
It was a sharp change of course for the markets after the heady gains since the lows around March 22-23.
Now Wall Street has to confront the August jobs and unemployment report tonight before going on a long weekend. With trading suddenly volatile and investors worried, no one will want to stay long until in equities after the rapidity of Thursday’s sell-off.
On Wednesday, the Dow surged 454.84 points, or 1.6%, ending at 29,100.50, or 1.5% away from its February 12 closing high of 29,551.42. The S&P 500 index added 54.19 points, or 1.5%, to settle at a record 3,580.84, its 22nd record close this year.
And the main driver of the market rebound since the lows of late March, the tech heavy The Nasdaq jumped 116.78 points to close at a record 12,056.44, a gain of 1%, and its 43rd record close of the year.
Thursday, all that reversed quickly after overnight losses in the futures market and falls of around 1% in European markets earlier in the session.
Analysts said this was either a timely bout of profit taking to allow investors to pause, or an early recognition that tech stock values are getting too high and the sector is overwrought.
Economic data on Thursday was OK – jobless claims fell, the trade deficit soared, productivity rose and wages jumped (because there are fewer lower paid workers employed).
The Aussie market was out of step (as usual) with a solid 0.8% or 49 point gain on Thursday which the futures market says will unravel today with a fall of more than 120 points for the ASX 200 when trading resumes later this morning.
Tech darlings such as Afterpay, Zip, WiseTech will see the brunt of the sell-off today.
Not helping confidence was another rise in the value of the US dollar – up now for three days in a row with a gain of half a per cent against its major peers.
That saw the Aussie dollar retreat to around 72.30 US cents after the near two year peak of 74.14 earlier this week.
US Treasury bond yields fell for a 5th session in a row. The 10 year yield closed at 0.621%.
Oil futures sold off amid worries about the strength of global demand. West Texas Intermediate crude for October delivery lost 14 cents, or 0.3%, to settle at $US41.37 a barrel, paring losses after trading as low as $40.22.
In Europe, November Brent futures fell 36 cents, or 0.8%, to $US44.07. That was the lowest settlement since July 31.
Gold lost ground with the December futures contract falling $US6.90, or nearly 0.4%, to settle at $US1,937.80 an ounce. Prices had fallen by 1.7% on Wednesday.
December silver meanwhile, dropped 52 cents, or 1.9%, at $26.875, following its 4.4% slide the day before Comex December copper lost 1.5% to end the session $US2.975 a pound.
But iron ore went against the trend, hitting a new near 8 year high of $US129.92 a tonne. That was up $US2.61 a tonne.
