Thursday was the Nasdaq's largest one-day decline from a record high in its history, according to Bespoke Investment Group.
All three major indexes finished the day sharply lower. The Nasdaq closed down nearly 5%, and the S&P fell 3.5%, while the Dow finished 2.8%, or 808 points, lower.
So, what happened?
For one, the Nasdaq has been outperforming the other two major stock indexes — the Dow (INDU) and the S&P 500 (SPX) — for months. The rally has been going on for long enough that investors are now taking profit.
Even so, the Nasdaq remains up nearly 28% in 2020, still far outpacing its counterparts. The Dow, which only recently turned positive for the year, is back in the red.
"Although there is no single driver for the weakness, it seems as if investors all of a sudden realized how overbought stocks are and sold. Someone yelled fire in a crowded theater and everyone left at once," said Ryan Detrick, chief market strategist for LPL Financial, in emailed comments.
But there are also technical reasons for Thursday's decline: As US-China relations sour, investors are moving money out of tech, which could get hit the hardest from a potential increase in tariffs.
"The Nasdaq is getting hit hard with the continued rotation into cyclicals and expectations big-tech will ultimately pay the cost to a further deterioration with US-Chinese relations," said Ed Moya, senior market analyst at Oanda.
Stocks in cyclical sectors are expected to perform better as the economy is recovering.
The Big Tech companies such as Amazon (AMZN), Google (GOOGL) and Microsoft (MSFT), all of which are part of the Nasdaq, have become the safe-haven investment of the summer. But investors have beginning to wonder when the rally will run out of steam, either because of increased regulation or because the economy as a whole picks up enough to void the need for safety picks altogether.
-- https://edition.cnn.com/2020/09/03/investing/nasdaq-selloff-stock-market-today/index.html
Submitted September 03, 2020 at 08:38PM by polloponzi https://ift.tt/3jIL2eV
