Stocks have their worst day since October as Big Tech sinks lower
Technology companies led a broad sell-off in stocks Wednesday, knocking more than 600 points off the Dow Jones Industrial Average and handing the market its worst day in nearly three months.
The S&P 500 fell 2.6%, its biggest single-day drop since it lost 3.5% on October 28. It had set a record high just two days earlier. The Dow and tech-heavy Nasdaq composite also fell more than 2%. The sell-off left the S&P 500 and Dow in the red for the year.
Facebook, Netflix and Google’s parent company led the pullback, which started early in the day as investors sized up the latest batch of company earnings reports. The market’s skid accelerated toward the end of the day.
The sharp selling is a shift from the market’s recent record-setting run and comes as investors focus on the outlook for the economy and corporate profits amid a still-raging coronavirus pandemic. The Federal Reserve said Wednesday it would keep its low interest rate policies in place even well after the economy has sustained a recovery from the pandemic.
Traders were also focused on the eye-popping surge in GameStop, a money-losing video game seller that became the focus of a battle between small investors bidding it higher and big hedge funds betting it would fall.
Expectations on Wall Street built up in recent weeks for a big economic financial boost from the Biden administration, which has proposed a $1.9 trillion stimulus plan. But Democrats’ slim majority in the Senate has raised doubts about how soon more aid might arrive and whether such a package will end up being scaled back by spending-wary lawmakers.
“The reality is setting in that the package won’t be quite as big and maybe a little bit delayed,” said Sal Bruno, chief investment officer at IndexIQ.
The S&P 500 fell 98.85 points to 3,750.77. The Dow lost 633.87 points, or 2%, to 30,303.17. The Nasdaq slid 355.47 points, or 2.6%, to 13,270.60. The Russell 2000 index of smaller companies gave up 41.16 points, or 1.9%, to 2,108.70.