Tech stocks pull market sharply lower, erasing much of Monday’s rally
A steep sell-off in technology companies pulled U.S. stocks down sharply late in the session Tuesday, knocking 344 points off the Dow Jones industrial average.
The market slide erased modest gains from earlier in the day and much of a powerful rally from the day before.
Banks also weighed on the market as bond yields declined. Investors bid up safer-play stocks such as utilities and real estate companies.
The market turbulence came the day after the major U.S. stock indexes notched their best day in more than two years, which in turn followed a steep slide last week.
“Just looking at the sector performance indicates to me this is a flight-to-safety kind of trade day,” said Sam Stovall, chief investment strategist at CFRA. “Until we get better guidance as to whether this correction is truly over, we will take a very choppy rise possibly to new highs a few months down the road.”
The Standard & Poor’s 500 index fell 45.93 points, or 1.7%, to 2,612.62. The Dow tumbled 344.89 points, or 1.4%, to 23,857.71. The 30-company average had been down as much as 493 points. A day earlier, it climbed 669 points.
The tech-heavy Nasdaq slid 211.74 points, or 2.9%, to 7,008.81. The Russell 2000 index of smaller-company stocks gave up 30.15 points, or 2%, to 1,513.57.
The major stock indexes appeared headed for more gains early Tuesday after their strong Monday finish, but the rally didn’t last. Stocks wavered much of the morning, then recovered somewhat, but finally veered sharply lower as investors sold shares in Nvidia, Twitter, Facebook and other technology companies.
Nvidia tumbled 7.8% to $225.52 — more than any other stock in the S&P 500 — on reports that the chipmaker has temporarily stopped testing its technology for self-driving cars in the wake of a deadly collision last week in Tempe, Ariz., that involved an Uber autonomous vehicle and a pedestrian.
Microsoft, which on Monday jumped more than any other company in the S&P 500, slid 4.6% on Tuesday to $89.47.
Tesla sank 8.2% to $279.18 on news that the National Transportation Safety Board has sent two investigators to look into a fatal crash and fire Friday in California that involved a Tesla electric SUV. The agency said on Twitter that it’s not clear whether the Tesla Model X was operating on its semi-autonomous control system, called Autopilot, at the time of the crash.
Social media companies also weighed on the market. Twitter slumped 12% to $28.07 after Citron Research said it is shorting the company, citing Twitter’s reliance on licensing its users’ data. The remarks come ahead of a Senate hearing on data privacy set for next month.
Facebook slid 4.9% to $152.22. The stock has been hit hard recently amid heightened government scrutiny into the social media giant’s collection of private user data. It has lost 20% of its value since hitting a record high Feb. 1.
Bond prices rose, sending the yield on the 10-year Treasury down to 2.78% from 2.85%.
The decline in bond yields weighed on banks and other financial stocks. When bond yields decline, it can bring down interest rates on mortgages and other loans, making those loans less profitable for banks. Citizens Financial Group shares fell 3.5% to $41.59.
Lower bond yields helped boost demand for high-yield stocks, such as real estate investment trusts and utilities. PG&E shares climbed 2.5% to $43.94.
U.S.-listed shares of British drugmaker GlaxoSmithKline rose 2.6% to $38.39 after the company agreed to buy out Swiss partner Novartis in their consumer health joint venture for $13 billion in cash.
Benchmark U.S. crude fell 30 cents to settle at $65.25 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slipped 1 cent to $70.11.
Heating oil fell 1 cent to $2.02 a gallon. Wholesale gasoline was little changed at $2.01 a gallon. Natural gas rose 7 cents to $2.69 per 1,000 cubic feet.
Gold fell $13, or 1%, to $1,342 an ounce. Silver fell 14 cents to $16.54 an ounce. Copper rose 3 cents to $3 a pound.
The dollar rose to 105.54 yen from 105.22 yen. The euro fell to $1.2402 from $1.2455.
Major indexes in Europe finished higher. Germany’s DAX and Britain’s FTSE 100 index each rose 1.6%, and France’s CAC 40 gained 1%. In Asia, Japan’s benchmark Nikkei 225 gained 2.7%. South Korea’s Kospi rose 0.6%. Hong Kong’s Hang Seng added 0.8%. Australia’s S&P/ASX 200 advanced 0.7%.
3:05 p.m.: This article was updated with closing prices, context and analyst comment.
1:05 p.m.: This article was updated with the close of markets.
This article was originally published at 11:50 a.m.
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