With tech stocks leading the way lower, stocks showed a significant move back to the downside during trading on Thursday. The tech-heavy Nasdaq showed a particularly steep drop, ending the day at its lowest closing level in three months.
The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Nasdaq plunged 381.58 points or 2.5 percent to 14,806.81, the S&P 500 tumbled 67.32 points or 1.4 percent to 4,659.03 and the Dow fell 176.70 points or 0.5 percent to 36,113.62.
The sharp pullback by the Nasdaq came as traders cashed in on some of the strength seen in the tech sector over the past few days.
Tech stocks got off to a rocky start in the New Year amid concerns about higher interest rates but regained some ground earlier this week.
Today’s subsequent sell-off suggests some traders remain wary about making big bets on tech stocks ahead of likely interest rate hikes in the near future.
Software stocks turned in some of the worst performances on the day, dragging the Dow Jones U.S. Software Index down by 4.3 percent. The index tumbled to its lowest closing level in almost six months.
Substantial weakness also emerged among semiconductor stocks, as reflected by the 2.3 percent slump by the Philadelphia Semiconductor Index.
Outside of the tech sector, healthcare, brokerage and retail stocks also came under pressure, while significant strength remained visible among airline stocks.
Traders were also digesting another reading on U.S. inflation, with a report from the Labor Department showing only a slight uptick in U.S. producer prices in the month of December.
The Labor Department said its producer price index for final demand edged up by 0.2 percent in December after jumping by an upwardly revised 1.0 percent in November.
Economists had expected producer prices to rise by 0.4 percent compared to the 0.8 percent increase originally reported for the previous month.
The report also showed the annual rate of producer growth slowed to 9.7 percent in December from a record high 9.8 percent in November.
Meanwhile, a separate report from the Labor Department showed an unexpected increase in initial jobless claims in the week ended January 8th.
The report said initial jobless claims rose to 230,000, an increase of 23,000 from the previous week’s unrevised level of 207,000. Economists had expected jobless claims to edge down to 200,000.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Thursday. Japan’s Nikkei 225 Index slumped by 1 percent, while Australia’s S&P/ASX 200 Index rose by 0.5 percent.
The major European markets also ended the day mixed. While the French CAC 40 Index fell by 0.5 percent, the German DAX Index crept up by 0.1 percent and the U.K.’s FTSE 100 Index edged up by 0.2 percent.
In the bond market, treasuries moved modestly higher over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.4 basis points to 1.711 percent.
Trading on Friday may be impacted by reaction to a slew of U.S. economic data, including reports on retail sales, industrial production and consumer sentiment.
Earnings news from financial giants Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC) is also likely to attract attention.
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