Wall Street fell for a third straight session on Tuesday, led by slumping mega techs stock prices which extended their sell-off to send the Nasdaq into correction territory.
The Dow Jones Industrial Average fell 632.42 points, or 2.25%, to 27,500.89, the S&P 500 lost 95.12 points, or 2.78%, to 3,331.84 and Nasdaq dropped 465.44 points, or 4.11%, to 10,847.69, ending more than 10% down from its most recent peak.
Nasdaq’s correction started a week ago and has gathered pace. It took just three sessions for Nasdaq to correct, the fastest on record according to marketwatch.com.
Reuters said at Tuesday’s lows on Tuesday, Facebook, Amazon.com, Apple, Tesla, Microsoft, Alphabet, and Netflix had collectively lost more than $US1 trillion in market value since September 2.
Energy shares slumped 3.71% as oil prices fell below $US40 a barrel.
The ASX will start weaker on Wednesday after ASX 24 overnight futures trading saw a fall of 96 points at 7 am, Sydney time – it was down 109 points an hour earlier.
Leading the way, electric car maker Tesla which suffered its biggest daily percentage drop – 21.6% – after the stock was passed over for inclusion in the S&P 500.
Each of the 11 major S&P sectors fell, led by drops in technology and energy.
Confusing things were the continuing speculation about big option purchases in recent days by Japanese tech investor, Softbank. The call options forced the sellers into the market to buy underlying shares, which in turn drove prices higher.
Media reports on Friday that SoftBank made significant option purchases during the run-up in US stocks added to investor nervousness.
The Financial Times said that Softbank held profits of $US4 billion on its options deals, leading analysts to start looking for the identity of the sellers and their potential losses.
Technology once again dragged indexes lower with a drop of 4.59%, the third straight decline, and worst three-day performance for the sector since big falls of mid-March. Could that fall trigger problems for Softbank as well?
