Stocks fell in volatile trading on Thursday amid renewed pressure in shares of major tech companies. Conflicting messaging on the coronavirus vaccine front and uncertainty around further stimulus also weighed on sentiment.
The Dow Jones Industrial Average slid 130.40 points, or 0.5%, to 27,901.98, snapping a four-day winning streak. The 30-stock average fell as much as 384.45 points, while briefly turning positive during the wild session.
The S&P 500 dropped 0.8%, or 28.48 points, to 3,357.01. The Nasdaq Composite fell 1.3%, or 140.19 points, to 10,910.28. The tech-heavy benchmark briefly dipped back into correction territory, down 10% from its all-time high.
“The market had gone up too much, too fast and valuations got to a point where that was more noticeable than before,” said Tom Martin, senior portfolio manager at GLOBALT. “So now you’re seeing the market correct a bit.”
“The question now is whether this is the kind of range we’ll be in for the rest of the year,” said Martin.
Facebook and Amazon were down 3.3% and 2.3%, respectively. Netflix closed 2.8% lower. Alphabet dropped 1.7% while Apple and Microsoft were both down at least 1%. Snowflake, an IPO which captivated Wall Street on Wednesday as it doubled in its debut, was off by 10.4%.
Thursday’s decline came amid conflicting messages about the timeline for a coronavirus vaccine. President Donald Trump said late Wednesday that the U.S. could distribute a vaccine as early as October, contradicting the director of the Centers for Disease Control and Prevention, who told lawmakers earlier in the day that vaccinations would be in limited quantities this year and not widely distributed for six to nine months.
Traders were also monitoring the status of stimulus talks after Trump suggested Wednesday he could support a larger package. However, multiple reports indicated that Senate Republicans appeared reluctant to do so without more details on a bill.
“I do feel the stimulus package is very hard to get,” CNBC’s Jim Cramer said on Thursday. “But if we do get it, you can’t be out of this market.”
“If we get a stimulus package and you’re out of the market, you will feel awful,” he said.
Meanwhile, Wall Street evaluated for a second day the Federal Reserve’s interest rate outlook where it indicated rates could stay low through 2023 as the central bank tries to spur inflation. Fed Chairman Jerome Powell said in a news conference easy monetary policy will remain “until these outcomes, including maximum employment, are achieved.”
Powell also pressed lawmakers to move forward with stimulus. But while traders want low interest rates, they may be second guessing what rates this low for years means for the economic outlook.
“There’s still a fair amount of uncertainty out there,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “When you look at the Fed’s projections … there was no inflation overshoot. Now, the longer-term projections were not included, so I imagine somewhere in there to be estimations of the Fed reaching — and going beyond — its 2% inflation goal. However, that was not noticeable.”
In economic news, the latest U.S. weekly jobless claims came in slightly better than expected. First-time claims for unemployment insurance totaled 860,000 in the week ending Sept.12, versus an estimate of 875,000, according to economists polled by Dow Jones.
— CNBC’s Yun Li contributed reporting.
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