NEW YORK: The tech-rich Nasdaq Composite Index skidded lower for the third week in a row, but this time it took the rest of the market down with it.
The Nasdaq slumped 128 points, or 3.10 percent, to 3,999.73. The Dow Jones Industrial Average and S&P 500, both of which avoided major falls the last two weeks, joined the Nasdaq in the red.
The Dow shed 385.96, or 2.35 percent, to 16,026.75, while the broad-based S&P 500 lost 49.40 points, or 2.65 percent, to 1,815.69.
The broadening of the pain in the market has deepened talk that a pullback sparked by the overvaluation of highflying technology and biotechnology names has morphed into an overall market correction.
Tech names endured an especially ugly close of the week. Since Wednesday’s close, Pandora Media sank 15 percent, biotechnology company Celgene fell 7.1 percent, Amazon shed 6.1 percent and Netflix lost 7.5 percent.
But other sectors also took a hit. JPMorgan Chase, weakened by a disappointing earnings report, lost 6.7 percent over the 48-hour stretch. Macy’s slid 3.3 percent and Visa shed 5.3 percent.
“In previous weeks, it didn’t really go into the broader market,” Wunderlich Securities chief market strategist Art Hogan said of the declines. “When the trend broadens to the overall market, I tend to be worried that it becomes self-fulfilling.”
Chris Low, chief economist at FTN Financial, agreed that investor psychology has deteriorated.
“People are always talking about a correction being necessary,” Low said. “But once the correction is under way, panic tends to set in. We seen to be at that panic point.”
Stocks had a muted reaction to Tuesday’s outlook from the International Monetary Fund, which trimmed its forecast for global growth, but also alluded to a recovery that “is becoming not only stronger, but also broader.”
The following day, US stocks rallied after US Federal Reserve minutes from a March policy meeting showed no support for an early rise in interest rates. Stocks jumped more than 1 percent on Wednesday, with the Nasdaq leading the charge with a 1.7 percent surge. But sentiment shifted on Thursday as the Nasdaq suffered its steepest decline in two-and-a-half years as another wave of anxiety about tech-sector overvaluation overtook the market.
Thursday’s drop came on the heels of March trade data from China, which showed imports dropped 11.3 percent and exports fell 6.6 percent. FTN’s Low said the weak China data played a factor in the late-week stock swoon. According to Low, other less-discussed factors behind the market’s retreat include a rise in health care costs due to the new health care law and the need of many investors to sell stocks in order to pay higher capital gains taxes following the stock market’s surge in 2013.AFP
