Nasdaq closes sharply lower as investors stay away from big tech companies | Financial Market News

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The Nasdaq ended sharply lower on Thursday as the US Federal Reserve’s announcement of a faster end to pandemic-era stimulus pushed investors away from big tech companies and toward more economically sensitive sectors.

Nvidia, Apple, Microsoft, Amazon and Tesla slipped between 2.6 percent and 6.8 percent, hitting the Nasdaq and S&P 500, while the Dow Jones Industrial Average fell marginally.

Most growth heavyweights have outperformed the broader market in 2021, with Nvidia up more than 100 percent year to date.

The Dow Jones Industrial Average fell 0.08 percent to close at 35897.64, while the Standard & Poor’s 500 lost 0.87 percent to 4,668.67.

The Nasdaq Composite Index fell 2.47 percent to 15,180.44.

The US central bank said, on Wednesday, that it would end its bond purchases in March, and indicated interest rate increases of three-quarters of a percentage point by the end of 2022.

This has pleased investors who are increasingly concerned about rising inflation linked to the coronavirus pandemic. On Thursday, however, it contributed to a massive sell-off in growth stocks.

The Standard & Poor’s 500 Index jumped 0.7 percent, while the growth index fell 2.1 percent, reflecting investor views that high-growth stocks tend to underperform when interest rates rise. The value index includes stocks that are likely to do well during an economic recovery.

“You see the money coming from growth, as it should. If we were going to an environment where interest rates were going up, growth stocks would be less attractive,” said Dennis Dick, a trader at Bright Trading LLC.

“There is a lot of uncertainty as we approach 2022 … we will have a tighter Fed that will pull out the huge pot,” he said.

Among the 11 major S&P 500 sector indices, technology fell 2.9 percent, while the financial sector rose 1.2 percent. Eight of the sectors rose, even as the general index declined.

“The Fed has given the market what it wants, and today I think investors are turning back into pandemic uncertainty, and they are also cautious as we approach the end of the year,” said Lindsey Bell, senior investment analyst at Ally Invest.

Recent readings of rising producer and consumer prices, as well as the rapidly spreading Omicron variant of the coronavirus, have raised concern. However, the S&P 500 is still up about 25 percent in 2021 and is trading near record levels.

The CBOE Volatility Index, often considered a measure of fear on Wall Street, fell to a three-week low.

Data showed that the number of Americans filing new claims for unemployment benefits rose moderately last week, remaining at levels consistent with tightening labor market conditions.

Separately, a survey showed that production at US factories rose to the highest level in nearly three years in November.

Lennar Corp fell 4.1 percent after the home builder missed analysts’ estimates of quarterly profit as pandemic-led supply chain problems pushed up timber costs and delayed home deliveries.

Low issues outnumbered advanced issues on the New York Stock Exchange by 1.03 to 1; On the Nasdaq, the ratio was 1.93 to 1 in favor of declining stocks.

The S&P 500 hit 69 new 52-week highs and three new lows; The Nasdaq recorded 43 new highs and 184 new lows.

Volume on US stock exchanges reached 11.6 billion shares, in line with the average over the last 20 trading days.

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