U.S. equities tumbled by the most in almost three months as the rotation away from high-flying tech stocks gained steam, with investors questioning the sustainability of lofty valuations.
The S&P 500 Index retreated from a record high and fell more than 4% in afternoon trading, set for its biggest drop since June amid declines in Apple, Microsoft, Amazon and Facebook. The Nasdaq 100 dropped more than 5%, its biggest intraday decline since March. European stocks erased gains and finished more than 1% lower.
Treasury yields dipped and the dollar rose.
Global equities are pulling back hard from unprecedented highs as investors question the justification for steep valuations as the pandemic rages on. While data Thursday showed applications for jobless claims fell last week, U.S. investors may need evidence of a fuller economic recovery after a 60% run-up in the S&P 500 since its March lows.
“What we’re seeing here just a little bit of a reckoning,” said Nancy Prial, co-chief executive officer at Essex Investment Management. “It’s too soon to say whether this is a pause that refreshes or whether this is the beginning of a more meaningful downturn in big tech. Most of these are great companies with really robust growth opportunities, but the stocks are very richly valued.”
The Cboe Volatility Index — a measure of expected price swings for the S&P 500 Index known as Wall Street’s “fear gauge” – rose to the highest level since June. Bitcoin fell as much as 7.6%.
Meanwhile, U.S. health officials have told states to prepare for a Covid-19 vaccine to be ready by Nov. 1, an aggressive goal that suggests availability just before the presidential election. Infectious disease expert Anthony Fauci warned of a potential surge in American cases from the coming long holiday weekend.
Elsewhere, oil slumped. Major equity gauges in Asia were mixed.
U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.
The S&P 500 Index sank 4% as of 3:10 p.m. New York time.
The Stoxx Europe 600 Index fell 1.4%.
The MSCI Asia Pacific Index fell 0.4%.
The MSCI Emerging Market Index dipped 1%.
The Bloomberg Dollar Spot Index climbed 0.1%.
The euro rose 0.1% to $1.1862.
The Japanese yen rose 0.1% to 106.05 per dollar.
The yield on 10-year Treasuries fell three basis points to 0.62%.
Germany’s 10-year yield fell one basis point to -0.49%.
Britain’s 10-year yield rose less than one basis point to 0.23%.
West Texas Intermediate crude declined 0.6% to $41.25 a barrel.
Gold fell 0.4% to $1,935.41 an ounce.