Big Tech shares again drag down markets

The three major U.S. indexes posted steep, across-the-board losses Tuesday as technology shares continued to fuel a sell-off that snapped a five-week winning streak on Wall Street and slashed 10 percent off the Nasdaq composite in three days.

The Dow Jones industrial average shed 632.42 points, or 2.3 percent, to close at 27,500.89. The Standard & Poor’s 500 index dropped 95.12 points, or 2.8 percent, to settle at 3,331.84, while the tech-heavy Nasdaq tumbled 465.44 points, or 4.1 percent, to end at 10,847.69.

After an uptick that analysts say is atypical of September, U.S. markets plummeted Thursday and Friday, dragged down by the tech giants ahead of the long holiday weekend. The markets were closed on Labor Day.

Big Tech lost big Tuesday: Amazon gave up 4.4 percent, Facebook shed 4.1 percent and Google parent Alphabet fell 3.6 percent. Biotechnological firm Moderna, which is working on a coronavirus vaccine candidate, lost nearly 13.2 percent.

Investors also are grappling with questions about U.S.-China trade, stymied coronavirus relief talks and growing worries about the November election, said Michael Farr, president of Farr, Miller & Washington.

“Each of these factors could imperil the narrative that has been baked into stock prices, which is a relatively quick economic rebound,” he said.

Tesla shares plunged 21.1 percent Tuesday after the S&P 500 passed on the carmaker.

Investors in the high-flying electric car company had been banking on Tesla joining the benchmark index — its share price has been rising all summer. And the company’s stock has rocketed more than 350 percent from the beginning of the year.

In Tesla, which has garnered a passionate fan base, akin to a consumer electronics company or a comic book media property, many longtime investors see an industry-defining pioneer, whose vision for an all-electric future has forced larger, more established automakers to play catch-up.

The company boosted its prospects on Wall Street further by posting earnings of more than $100 million in July, its fourth consecutive quarter of profitability, a first for Tesla.

Optimistic investors continued to pour money into the company, sending its market capitalization above corporate giants such as Home Depot and Intel. And in another summer milestone, Tesla surpassed the market value of Toyota, seizing the crown of the most valuable carmaker in the world, despite selling fewer than 400,000 vehicles last year, compared with Toyota’s 10.74 million.

But investors’ hopes were dashed when S&P Dow Jones Indices, the company that oversees the S&P 500, announced late Friday that it would not add Tesla to its widely tracked index.