Wall Street drops as tech stocks take a beating

Wall Street drops as tech stocks take a beating

The tech-heavy Nasdaq index in the US saw sharp declines as internet stocks faltered for a second day on concerns about increased regulation, while chipmaker stocks slid on signs of flagging demand.

Facebook and Twitter executives had defended their companies before sceptical US lawmakers earlier in the week and the US Department of Justice said it would discuss, at a meeting on September 25, concerns that social media platforms are “intentionally stifling the free exchange of ideas”.

Facebook shares fell at one stage by 3.8%, Twitter dropped over 6%, Google-owner slipped almost 3%, and Snap was down 4.8%, hitting a fresh record low.

“The market has lost its leader for now, while people take profits based on the potential for regulation,” said Brent Schutte at Northwestern Mutual Wealth Management in Milwaukee.

“We’ve stretched this rubber band pretty far and potentially it’s time for other sectors to lead rather than follow,” he said.

Investors were keeping an eye on trade developments as a public comment period, on the Trump administration’s plan for fresh tariffs on Chinese imports. China has warned of retaliation if Washington implements any new tariff measures.

The selloff in US technology shares accelerated as emerging-market equities headed for a bear market. Emerging-market stocks sank the seventh day, bringing losses from a recent high past 20% to meet the common definition of a bear market.

“There are many risks out there,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

“Emerging markets causing market chaos (forget US stocks are at all time highs and could care less), rising trade tensions threatening long-established world trade patterns and disrupting company supply-chains,” he said.

The weakness in tech shares comes ahead of the key US payroll report later today that will offer clues on the US labour market’s health and the state of wage inflation.

- Reuters and Bloomberg

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