Wall Street falls due to liquidation of technology
Major Wall Street indices plunged, posting their deepest daily declines in months. This was a result of a sharp collapse of the weakest US economic data and tech companies in the US. The predictions exacerbated fears of a challenging economic recovery.
The technology-focused Nasdaq led the declines. Declines hit its top stocks in companies such as Facebook Inc (NASDAQ: FB), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT) Inc, and Google parent, Alphabet Inc (NASDAQ: GOOGL).
These five companies represent about a quarter of the market value of the S&P 500. They have fueled the technology-driven stock market rally from lows reached in March.
Investors expect a slow recovery
The pullback comes a day after the S&P 500 and Nasdaq closed at record levels. Besides, the Dow hit 1.5% of its February peak, fueled by hopes of fiscal and monetary support for a rapid economic recovery.
But some market players said investors have become too optimistic.
Emily Roland, co-director of investment strategy at John Hancock Investment Management, stated that the market has been ignoring the growing number of risks for the past few months. Sixty days are left until the election. Roland says it may be a time when investors are getting a little scared.
Data showed that initial requests for unemployment aid in the United States fell below a million last week. The second time the number has been below that threshold since the start of the pandemic. Still, the data is not sufficient evidence of a strong recovery in the labor market.
The Dow Jones Industrial Average fell 807.77 points, or 2.78%, to 28,292.73 units. The S&P 500 lost 125.78 points, or 3.51%, to 3,455.06 units. Meanwhile, the Nasdaq Composite dropped by 598.34 points, or 4.96%, to 11,458.10 units.
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