Stocks End Lower Amid Selloff in Tech Stocks

After hitting record intraday highs, stocks closed lower led by a selloff in tech shares.

It was unclear what exactly triggered the sharp afternoon selloff but market strategists said a number of factors, including negative analyst comments for, job cuts at JP Morgan and comments from European central bankers may have helped trigger the afternoon downturn.

"We've certainly had a good run in the market and it's been driven by momentum and not neccesarily valuation," said John Massey, portfolio manager at AIG SunAmerica Asset Management.

The tech-heavy Nasdaq Composite closed with a sharp decline of 1.4% while the Dow Jones Industrial Average and the S&P 500 each ended with more modest declines of 0.5%. Earlier, the Dow and S&P hit new intraday records following strong guidance from Wal-Mart.

The fund manager downplayed the significance of news that JPMorgan will cut jobs in certain groups in its investment banking division, including structured credit and leveraged finance.

"Job cuts have been rumored for so long, I don't think anybody would be surprised of job cuts on Wall Street given what we went through last month."

"It's quite the reversal but we were overextended as it was," said Rick Pendergraft, said chief investment analyst of Investor’s Daily Edge, an investment newsletter.

"We're just starting with third quarter earnings and while Alcoa was a disappointment, expectations are very low and have been set low by analysts and have not been that hard for many companies to beat," said Sebastian Leburn, chief investment officer at Weiss Capital Management.

Wal-Mart Stores increased quarterly earnings guidance despite seeing same-store sales growth in September come in weaker than analysts' forecasts. Wal-Mart's guidance offset mixed reports from other retailers.

"I've been liking this market for a while and I think people have been very pessimistic about earnings," said Doreen Mogavero, president of Mogavero, Lee & Co. "I think you're going to get a lot of surprises and we're seeing a couple of surprises that we didn't think we're going to get."

By contrast, other chains, including Target , J.C. Penney and Nordstrom , cut their outlooks.

Meanwhile, the number of workers filing new claims for jobless aid fell a larger-than-expected 12,000 last week, the government said on Thursday, while the number of longer-term unemployed unexpectedly fell to its lowest level since June. That provided more comfort that the economy would be supported by a healthy labor market.

In addition, the U.S. trade deficit data also came in narrower than expected in August, to $57.6 billion, as the weak US dollar and stronger growth overseas helped push exports to a record.

PepsiCo posted stronger-than expected earnings report as the food and beverage company benefited from strong sales of its Frito-Lay snacks. Pepsi said earnings rose 17%, topping analysts' consensus estimates.

U.S. Treasuries fell on Thursday as rallying stocks pulled cash away from the safe-haven government debt market, as new data showed signs of resilience in the economy.

The euro gained on the dollar for the third straight session on Thursday and was on track for its biggest daily rise against the yen in three weeks as stocks rallied and investors rediscovered a taste for risk.

Light sweet crude saw sharp gains, closing at $83.08 a barrel on the New York Mercantile Exchange, following a surprise drawdown in U.S. crude and distillate inventories. Crude closed higher for the third straight session and is just below its record close of $83.32 set on Sept. 20.

Asian markets ended with gains across the board as Hong Kong, Australia and South Korea all touched lifetime highs. Meanwhile, European markets ended higher, as promises of higher returns to shareholders at Telefonica lifted telecoms.

The earnings season started on a disappointing note earlier this week, with such heavyweights as Alcoa and Monsanto among companies that reported weaker profits.