Nasdaq tumbles for second day as Big Tech loses ground

The Nasdaq tumbled for a second straight session on Tuesday, and the S&P 500 also fell, as rising Treasury yields prompted investors to sell Tesla, Microsoft and other Big Tech names.

The S&P 500 growth index dropped about 1% and the value index added 0.6% as investors sold stocks that are sensitive to higher interest rates and bought stocks in sectors such as energy and financials.

Treasury yields extended gains as investors ramped up expectations of interest rate hikes next year after Jerome Powell was nominated by President Joe Biden as fed chair for a second term.

Also Read | Nasdaq and S&P 500 end down after hitting record highs

Tesla slid 6.3%, while Microsoft and Apple dropped about 1% each. The three companies were the biggest drags on the S&P 500 and the Nasdaq.

“The market is being whipsawed by a holiday-shortened week, and it’s taking its cue from the recent uptick in interest rates, giving investors additional reasons to take profits in an overvalued market,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

With banks benefiting from higher interest rates, the S&P 500 banks index jumped 2%, with Goldman Sachs, JPMorgan and Bank of America all rallying.

The S&P 500 energy index jumped over 3% and was the best-performing sector. Oil prices rose to a one-week high after a move by the United States and other consumer nations to release tens of millions of barrels of oil from reserves to try to cool the market fell short of some expectations.

An IHS Markit survey showed U.S. business activity slowed moderately in November amid labour shortages and raw material delays but remained comfortably in expansion territory on strength in the manufacturing sector.

In afternoon trading, the Dow Jones Industrial Average was up 0.29% at 35,721.95 points, while the S&P 500 lost 0.27% to 4,670.22.

The Nasdaq Composite dropped 1.26% to 15,654.67.

After closing its highest level ever last Friday, the Nasdaq has now lost about 2.5%. It remains up about 21% so far in 2021.

The CBOE volatility index briefly rose to a more than one-month high earlier on Tuesday.

The U.S. stock market will be closed on Thursday for the Thanksgiving holiday, and it finishes early on Friday.

Zoom Video Communications Inc slumped 17% after its third-quarter revenue growth rate slowed as demand for its video-conferencing tools eased from pandemic-fueled heights last year.

Best Buy Co Inc slid 13% after the electronics retailer forecast fourth-quarter comparable sales below expectations due to supply chain issues.

Chipmakers Micron Technology and Western Digital Corp rose 1.3% and 6.2%, respectively, after Mizuho Bank upgraded the stocks to "buy" from "neutral".

Declining issues outnumbered advancing ones on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 2.02-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 47 new highs and 459 new lows.

Watch the latest DH Videos here: