Stocks sold off on Tuesday, kicking off a volatile week in trading after the long holiday weekend. Tech stocks continued to tumble as some of the highflying names that gained ground in recent months lost some of their luster with investors. Oil prices also dropped to their lowest levels since early June.
Dow Jones Industrial Average
closed down 633 points, or 2.3%, while the
slid 2.8%. The tech-heavy
lost 4.1%, to 10,847.7—in correction territory, down 10% in just three trading days from its Sept. 2 record high close.
The S&P 500 technology sector closed down 4.5%, making it the worst-performing group in the index. The selloff in tech shares began last Thursday. More cyclical and value-oriented stocks in financials and industrials strongly outperformed late last week as investors rebalanced from their tech winners, betting on a vaccine and economic recovery ahead.
Tuesday’s selloff had a slightly more “risk-off” feel to it. Industrials and financials traded better than technology, but not as well as haven sectors like utilities or health care. And bond yields dropped: the yield on the 10-year U.S. Treasury note fell 4 basis points, or hundredths of a percentage point, to 0.682%, as the price of the security rose. The price of gold reversed an earlier loss to gain 0.5%, at $1,933 an ounce. And the U.S. dollar rose, with the DXY 0.8% higher.
Oil also tumbled. The price of West Texas Intermediate crude settled down 7.6%, at $36.76 a barrel, its lowest price since early June. Brent crude lost 5.3% to $39.78.
Asian markets rose on Tuesday while European stocks fell after a powerful rally. The
rose 0.8% and the
added 0.7%. The
Stoxx Europe 600
slid 1.2%, after a 1.7% advance on Monday.
Wall Street also weighed continuing tensions between the U.S. and China. A day after China reported its largest trade surplus with the U.S. in almost two years, President Donald Trump focused on the country in a news conference. “Whether it’s decoupling or putting in massive tariffs like I’ve been doing already, we’re going to end our reliance on China because we can’t rely on China,” said Trump.
The U.S. may ban cotton from the Xinjiang region of China over human rights concerns, the New York Times reported.
Semiconductor Manufacturing International Corp.
slumped 22% in Hong Kong on Monday, after Reuters reported the Trump administration was weighing adding the microchip maker to its blacklist, which includes Chinese telecom equipment makers Huawei Technologies and ZTE.
Elsewhere in Washington, the Senate returned on Tuesday with Republicans expected to offer a draft of a fiscal stimulus and coronavirus relief bill. Democrats in Congress have a separate draft.
Tech stocks tumbled, and investors don’t need a reason to continue selling.
(ticker: AAPL) shares fell 6.7%, continuing last week’s tech rout. Shares of
(AMZN) dropped 4.4% and
(MSFT) shares lost 5.4%.
(BA) stock dropped 5.9% after the aerospace company disclosed a manufacturing issue with its 787 Dreamliner that was slowing deliveries. With the 737 MAX grounded for over a year, the Dreamliner had become a larger portion of Boeing’s commercial aircraft sales.
But it wasn’t all bad news.
(NKLA) shares soared 40.8% after announcing it formed a partnership with
General Motors (GM)
and that GM now has an 11% stake in the electric truck maker. Shares of GM closed up 8%.
(PTON) shares added 6.2% after it unveiled a new bike, a lower price treadmill, and a new fitness class format as people increasingly exercise at home due to gym closures amid the coronavirus pandemic. The company reports earnings results on Thursday.
(DIS) stock rose 1.7% after being upgraded to Buy, from Hold, at Deutsche Bank. The analyst, Bryan Kraft, focused on the company’s long-term streaming potential. That outweighed near-term pandemic-related pressure on Disney’s movie, theme park, and television businesses. Kraft’s price target is $163, about 21% above Disney stock’s recent levels around $135.