US STOCKS-Stocks fall as tech remains under pressure, Tesla tumbles

  • Reuters
  • Stock Market News
US STOCKS-Stocks fall as tech remains under pressure, Tesla tumbles
Credit: © Reuters.

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* Tesla tumbles after exclusion from S&P 500

* GM jumps after taking stake in electric-truck maker Nikola

* Sell-off in Amazon, Apple, other big tech stocks resumes

* Dow down 1.45%, S&P 500 down 1.93%, Nasdaq down 2.92% (Updates to mid-afternoon, changes byline)

By Chuck Mikolajczak

NEW YORK, Sept 8 (Reuters) - U.S. stocks dropped for a third straight session on Tuesday as a sell-off in high-flying technology names continued from the prior week, while Tesla was poised for its worst day in nearly six months after the stock was passed over for inclusion in the S&P 500.

Ten of the 11 major S&P sectors were lower, with only the defensive utilities SPLRCU group edging higher. News on Friday that SoftBank 9984.T made significant option purchases during the run-up in U.S. stocks added to investor nervousness.

Technology .SPLRCT once again dragged indexes lower with a decline of nearly 3%, the third straight decline and worst three-day performance for the sector since mid-March. Even with the recent drop, the sector remains the best performer on the year, up about 25%.

"Valuations were stretched and now that it is starting to sell off a little bit, they are shaking the branches and some of that weaker money is falling out," said Ken Polcari, chief market strategist at SlateStone Wealth LLC in Jupiter, Florida.

"You have a lot of people that are just suddenly getting very nervous because the sell-off the last three days has been relatively rapid."

In late afternoon trading, the Dow Jones Industrial Average .DJI was down 408.28 points, or 1.45%, at 27,725.03, the S&P 500 .SPX lost 66.07 points, or 1.93%, to 3,360.89 and the Nasdaq Composite .IXIC dropped 330.44 points, or 2.92%, to 10,982.70.

Energy .SPNY shares also slumped as oil prices fell below $40 a barrel. reports of SoftBank's option purchases also reminded investors that market makers might have billions of dollars' worth of long positions as hedges against options trades.

Street's rally, which has been fueled in large part by massive amounts of monetary and fiscal stimulus, screeched to a halt last week with the Nasdaq falling as much as 9.9% from its intraday record as investors booked profits after a run that lifted the index about 70% from its pandemic lows.

At session lows on Tuesday, Facebook FB.O , AMZN.O , Apple AAPL.O , Tesla TSLA.O , Microsoft MSFT.O , Alphabet GOOGL.O and Netflix NFLX.O had collectively lost more than $1 trillion in market capitalization since Sept. 2.

Tesla plunged 17.47%, on pace for its biggest daily percentage drop in almost six months as the electric-car maker was excluded from a group of companies being added to the S&P 500. Investors had widely expected its inclusion after a blockbuster quarterly earnings report in July. Up to Friday's close, the stock had surged about 400% this year.

JPMorgan Chase (NYSE: JPM ) & Co JPM.N fell 3.0% after a report it was probing employees who were allegedly involved in the misuse of funds intended for COVID-19 relief. The wider banks index .SPXBK lost 3.0%, also tracking Treasury yields. US/

Value-linked stocks .IVX fell 1.2%, but outperformed the broader market and a 2.4% decline in the growth-link index .IGX . Wall Street's fear gauge .VIX climbed for the third time in four sessions.

Fears over potential U.S. sanctions against China's biggest chipmaker, SMIC 0981.HK , hit domestic suppliers, with the PHLX semiconductor index .SOX down 3.43%.

General Motors Co (NYSE: GM ) GM.N jumped 9.1% after it acquired an 11% stake worth $2 billion in U.S. electric-truck maker Nikola Corp NKLA.O . The truck maker's shares surged 45.9%. issues outnumbered advancing ones on the NYSE by a 2.57-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 2 new lows; the Nasdaq Composite recorded 28 new highs and 45 new lows.

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