Stocks fell sharply on Thursday, retreating from all-time highs as tech — the market leader since the rebound began in late March — suffered its biggest drop in months.
The Dow Jones Industrial Average dropped 807.77 points, or 2.8%, to 28,292.73 for its biggest one-day decline since June 11. The S&P 500 slid 3.5% to 3,455.06 and the Nasdaq Composite fell by 5% to close at 11,458.10.
"Someone hit the 'sell tech, buy dreck' button and this is creating a bid beneath beleaguered groups, while [tech] gets pummeled," said Adam Crisafulli of Vital Knowledge. "For tech specifically, the stocks are seeing large percent declines, but this comes after a massive recent rally. Tech has been untethered from fundamentals for a while and momentum can work in both directions."
Apple shares fell 8% for their biggest one-day decline since March 16. Amazon and Netflix were both down more than 4% and Facebook slid 3.8%. Microsoft slipped 6.2%. Alphabet pulled back by 5.1%. The S&P 500 tech sector closed 5.83% lower, snapping a 10-day winning streak. The sector also posted its biggest one-day loss since March.
"I'm not sure that just today's weakness is sufficient enough to ease some of those excesses and tell the short-term folks this is the kind of dip you want to buy. I don't have a clear crystal ball more than anybody else, but certainly the excess suggests something more than a single-day compression in the high-flyers may be necessary to kind of right the ship," Liz Ann Sonders, chief investment strategist at Charles Schwab, said on CNBC's "Closing Bell."
Shares of beaten-down companies that would benefit from the economy reopening rose, bucking tech's negative trend. Cruise operator Carnival advanced 5.2%. Macy's popped nearly 8%.
Thursday's moves came after another record-setting session for the S&P 500 and the Nasdaq Composite, which also added to the market's strong move off the March 23 lows.
Since late March, the S&P 500 is up more than 50% and the Nasdaq has rallied over 60%. The Dow has surged more than 50% in that time. To be sure, some analysts think it may be time for the market to consolidate some of its recent sharp gains.
"While we don't expect a crash to happen again now, we don't need new highs to grow every day to keep the uptrend alive either," said Frank Cappelleri, executive director at Instinet, in a note. "With the [S&P 500] up 9/10 days and having just logged its biggest advance in two months, it's certainly earned a period of which to digest."
Thursday's decline came even after better-than-expected unemployment data.
The number of first-time filers for unemployment benefits totaled 881,000 for the week ending Aug. 29, the Labor Department said Thursday. Economists polled by Dow Jones expected first-time applications to have decelerated to 950,000 during the week ending Aug. 29.
That report came a day ahead of a widely anticipated U.S. jobs report. Economists polled by Dow Jones expect the U.S. economy to have added 1.321 million jobs in August. The jobs report will be released as lawmakers struggle to reach a deal on further coronavirus stimulus.
"Let me be clear: The only reason we do not have a stimulus bill passed yet is because the economy and the markets are performing much better than people thought possible," said Tom Essaye, founder of The Sevens Report. "The 'best' outcome for stocks into tomorrow's jobs report is for a strong number, but not so much better than estimates that it relieves more pressure on Congress to get a deal done."
—CNBC's Yun Li and Kevin Stankiewicz contributed reporting.
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