Stocks perk up on Wall Street as tech bloodletting halts
By STAN CHOE
AP Business Writer
NEW YORK (AP) — Wall Street is steadying itself Wednesday following its first three-day losing streak in nearly three months, as the bloodletting for big technology stocks comes to at least a temporary halt.
Apple, Amazon, Zoom Video Communications and other tech companies that have tumbled since late last week on worries their stocks soared too high all regained some ground. They helped push the S&P 500 up by 1.6% in morning trading.
The Dow Jones Industrial Average was up 423 points, or 1.5%, at 27,924 as of 10:15 a.m. Eastern time. The Nasdaq composite, which is home to many tech stocks, was up 1.9%. It’s coming off a 10% drop over the prior three days.
Tesla, which has seen some of the wildest moves in recent months, rose 7.4%. A day earlier, it plunged 21.1% for its worst day since its shares began trading a decade ago. In August, it surged 74.1%.
Selling over the last week in the market has focused on such tech superstars, which had earlier zoomed through the pandemic amid expectations that they would benefit from the new stay-at-home economy. Blockbuster profit reports from many of them for the spring emboldened investors, who bid their stock prices up to levels that critics called too expensive, even after accounting for their powerful growth.
A flurry of buying of stock options for Big Tech stocks may have helped further goose the gains, analysts say.
The huge leaps for Big Tech helped carry the S&P 500 and Nasdaq back to record heights, even though the economy is still struggling under the weight of the coronavirus pandemic. But the fever broke on Thursday, with the S&P 500 losing 7% over three days.
Still to be determined is whether the recent sell-off is just a blowing-off of some steam for tech stocks that had gotten overheated — or whether it’s the beginning of a more widespread downturn.
Other stocks didn’t get as expensive as Big Tech during the recent run-up. Banks and other financial stocks in the S&P 500 are still down nearly 20% for 2020 so far, for example. But several challenges continue to loom over the entire market, not even including the uncertainty about how the pandemic will progress.
Trade issues remain a worry for markets, with the souring U.S.-China relationship in the brightest spotlight. But that’s not the only potential hot spot.
Tiffany lost 9.8% after European luxury giant LVMH ended its $14.5 billion takeover deal for the jewelry retailer. LVMH said it made the move in part because the French government requested a delay due to the threat of proposed U.S. tariffs on French products.
Investors are also still waiting for Congress to deliver more aid to the economy after unemployment benefits and other stimulus that it earlier approved ran out. Investors say it’s critical that the economy get such stimulus, but partisan disagreements have Congress at what seems to be an impasse.
The Senate is preparing to vote this week on a trimmed-down relief package proposed by Republicans, but it has only a slim chance of passage as Democrats are insisting on more sweeping aid.
The stock market’s rally started in late March following massive amounts of aid from the Federal Reserve and Congress and then accelerated as the economy showed some signs of improvement. Corporate profit reports for the spring that weren’t as disastrous as expected also helped to lift the market.
Late Tuesday, Slack Technologies also reported what analysts called a good quarter of performance, with revenue topping expectations. But the company also reported billings that were weaker than expected, and its stock tumbled 14.7%.
Hopes for a potential COVID-19 vaccine also helped the S&P 500 erase all of its nearly 34% loss from earlier in the pandemic. U.S-listed shares of AstraZeneca fell 1.5% Wednesday, though, after it put late-stage studies of its vaccine candidate on temporary hold while it investigates whether a recipient’s illness is a side effect of the shot.
Treasury yields were holding relatively steady, with the 10-year yield dipping to 0.67% from 0.68% late Tuesday.
Crude oil clawed back some of its slide from the prior day. Benchmark U.S. crude gained 0.8% to $37.06 per barrel. Brent crude, the international standard, added 0.6% to $40.00 per barrel.
European stocks were higher, with France’s CAC 40 up 1.6% and Germany’s DAX returning 1.9%. The FTSE 100 in London added 1.6%.
Asian markets were weaker. Japan’s Nikkei 225 fell 1%, South Korea’s Kospi lost 1.1% and the Hang Seng in Hong Kong dipped 0.6%. Stocks in Shanghai dropped 1.9%.
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