Markets

Dow falls more than 100 points as tech drop pushes stocks off record highs

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Jim Cramer weighs in on Mnuchin's $916 billion stimulus proposal for Covid relief

Stocks fell on Wednesday, retreating from the record highs set earlier in the day, as tech shares struggled and traders weighed the prospects of new fiscal stimulus.

The Dow Jones Industrial Average closed 105.07 points lower, or 0.35%, at 30,068.81. The S&P 500 fell 0.8% to 3,672.82. The Nasdaq Composite pulled back by 1.9% to close at 12,338.95. Earlier in the session, the Dow was up more than 100 points. All three averages also touched fresh intraday records.

Apple was among the worst-performing Dow components, falling more than 2%. Salesforce dropped 3.2%. The S&P 500 tech sector fell 1.9% to lead the index lower. Facebook declined 1.9% after the Federal Trade Commission, along with several states, filed lawsuits that could force the social media giant to divest Instagram and WhatsApp.

NXP Semiconductor and Qorvo fell more than 5% each and were among the worst-performing chip stocks on Wednesday. The VanEck Vectors Semiconductor ETF (SMH) closed 3.1% lower. The overall tech sector came under pressure even after DoorDash became the latest company from the sector to make a spectacular public-market debut. Shares of DoorDash closed higher by 85%.

"I think we're having a bit of a digestion day after hitting new highs," said Keith Lerner, chief market strategist at Truist. "There's some hesitation because of the stimulus talks, but leadership still shows the market is leaning toward something happening" on that front. Lerner pointed out that small-cap stocks weren't down as much as the large-cap indexes.

The major averages gave back their initial gains after Senate Majority Leader Mitch McConnell told Politico that Republicans and Democrats were "still looking for a way forward" on additional fiscal aid.

Those remarks came after Treasury Secretary Steven Mnuchin pitched Tuesday a $916 billion stimulus package to House Speaker Nancy Pelosi.

McConnell, meanwhile, said he wants Congress to pass a coronavirus relief bill with neither legal immunity for businesses nor state and local government relief. Senate Minority Leader Chuck Schumer, D-N.Y., said McConnell's proposal to move stimulus talks forward without state and local government aid is not in good faith.

"The US fiscal stimulus process has turned somewhat acrimonious, but Congress has another 1.5 weeks to try and reach a compromise (as the budget deadline is about to get pushed" to Dec. 18, said Adam Crisafulli of Vital Knowledge.

The volatile negotiations come amid the worst days of the coronavirus pandemic so far. More than 200,000 Americans are testing positive for the coronavirus every day on average, according to a CNBC analysis of Johns Hopkins University data.

The United States has seen 1 million new cases in just four days, bringing the national total to over 15 million.

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