A view of the exterior of the Nasdaq market site in Times Square in the Manhattan borough of New York City, U.S., October 24, 2016. REUTERS/Shannon Stapleton
NEW YORK: The Nasdaq lost ground sharply in late morning trade on Thursday, dragged down by market heavyweights Apple and Amazon, as investors poured money into others sectors that may benefit from Donald Trump’s victory in the US election.
The S&P 500 reversed course to trade slightly lower, while the Dow pared gains after hitting a record intraday high earlier in the session.
While some parts of the market, such as health, industrials and banks are likely to benefit from Trump’s policies of tax cuts, higher fiscal spending and simplifying regulations.
But the possibility of Trump slapping punitive tariffs on Chinese and Mexican exports, risking a global trade war, have worried investors.
“Tech stocks aren’t really in the handbook,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
“They aren’t really going to benefit from Trump’s stimulus spending on infrastructure and are sort of sitting in the middle. They aren’t part of the oversold sectors such as banks and health nor are they high dividend paying stocks that getting sold off.”
Apple was down 3.25 at US$107.30, while Amazon was off 5%.
The S&P 500 technology index plunged 2.5% and was on track for its worst day since the Brexit vote in June.
“Tech has the most important export exposure of any sector, so there are some fears of rising trade barriers that would hit tech pretty meaningfully,” said Mike Bailey, director of research at FBB Capital Partners.
High-dividend sectors utilities, telecom services and consumer staples sold off as bond yields rose due to expectations of higher interest rates.
Financial and healthcare stocks rose, continuing to hold their positions as the top performers in the post-Trump victory rally.
The dollar jumped to a more than two-week high of 98.92, while gold turned flat as investors returned to riskier assets such as stocks.
The Mexican peso continued its downward momentum against the dollar as Trump’s policies are considered deeply negative for the country.
At 10:42am ET (1442 GMT), the Dow Jones industrial average was up 106.49 points, or 0.575, at 18,696.18.
The S&P 500 was down 5.38 points, or 0.25%, at 2,157.88 and the Nasdaq Composite was down 85.20 points, or 1.62%, at 5,165.87.
Macy’s rose 6.7% to US$41.01 after the department store operator raised its full-year sales forecast and announced a partnership to monetise some of its real-estate assets.
IBM provided the biggest boost to the Dow, rising 2.7% to US$159.02, after Bank of America Merrill Lynch upgraded the stock and raised its price target.
Walt Disney and Nordstrom are expected to report earnings after market closes.
Declining issues outnumbered advancing ones on the NYSE by 1,688 to 1,267. On the Nasdaq, 1,417 issues rose and 1,267 fell.
The S&P 500 index showed 79 new 52-week highs and six new lows, while the Nasdaq recorded 258 new highs and 32 new lows. - Reuters
* See also Stock markets’ Trump rally runs out of steam
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