NewsTech sells as Nasdaq sinks more than 2%

NewsTech sells as Nasdaq sinks more than 2%

  By Shreyashi Sanyal and Krystal Hu    * CVS Health gains after raising 2021 profit view (Updates prices to early afternoon, adds Yellen comments) 

  May 4 (Reuters) – The Nasdaq tumbled more than 2% on Tuesday as steep declines in megacap growth stocks pushed Wall Street below record trading levels, with investors seeking shelter in more defensive parts of the market.    Seven out of the 11 major S&P 500 sectors were down, with technology, communication services and consumer discretionary falling more than 1.7% each. 

  “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said in taped comments at a virtual event by The Atlantic on Tuesday.    The defensive financials, materials and energy sectors managed to extend their gains from Monday, rising sightly in early afternoon trading. 

  Comments by Treasury Secretary Janet Yellen on the potential need for rising interest rate further exacerbated the tech selloff, as investors worry higher rates would weigh on valuations of growth companies.    Highly valued technology-related companies including Microsoft Corp, Alphabet Inc, Apple Inc , Inc and Facebook Inc fell between 2.2% and 4.2%. The Philadelphia Semiconductor Index dropped over 2.3%. 

  “When we have pauses or pullbacks people tend to move out of growth stocks into more defensive names.”    “When you’re at all-time highs and the market pulls back, the ones that tend to lead to the downside are often the high-beta stocks such as technology,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. 

  By 2:05 p.m. ET (1805 GMT), the Dow Jones Industrial Average fell 72.32 points, or 0.21%, to 34,040.91, the S&P 500 lost 44.02 points, or 1.05%, to 4,148.64 and the Nasdaq Composite dropped 343.71 points, or 2.47%, to 13,551.41.    Fiscal stimulus, rapid vaccinations and the Federal Reserve’s accommodative stance have spurred a strong rebound in the U.S. economy and pushed Wall Street to record highs this year. The so-called “pandemic winners,” however, have recently started to fall out of favor.  Story continues

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