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Location: Home / Technology / Wall Street tumbles as tech stocks extend slide

Wall Street tumbles as tech stocks extend slide

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Jan 10 (Reuters) - Wall Street's main indexes tumbled on Monday, as heavyweight technology stocks dropped on expectations of a sooner-than-expected rate hikethat pushed U.S. Treasury yields to fresh two-year highs.

The Nasdaq (.IXIC) fell as much as 10.37% below its intraday record level reached on Nov. 22. It was last trading around 9% below its Nov. 19 closing record. To confirm a correction the index would need to close 10% or more below the record close.

Megacap companies including Apple Inc (AAPL.O), Amazon.com Inc , Microsoft Corp (MSFT.O) and Meta Platforms Inc (FB.O) fell between 2.1% and 4.4%.

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The S&P 500 consumer discretionary (.SPLRCD), technology (.SPLRCT) and communication services (.SPLRCL) sectors, housing major growth companies, fell the most among the 11 major S&P sectors.

"Big tech companies should do fine because rising rates don't really affect them too much," said Randy Frederick, managing director of trading and derivatives at Charles Schwab in Austin, Texas.

Wall Street tumbles as tech stocks extend slide

"But, they are getting dragged down by the fact that people are selling off the unprofitable, heavily leveraged, heavily indebted newer tech companies that have gone public recently, especially the ones that were SPACs (special purpose acquistion companies)."

Companies such as BuzzFeed (BZFD.O) and Grab Holdingsfell more than 5% and have lost nearly half their market capitalization since their public debut in December through a SPAC. read more

Frederick expects the tech selloff to go on "till at least the next Fed meeting, which is around January 26."

The S&P 500 (.SPX) and the Nasdaq indexes were on course for their fifth straight day of declines as growth stocks tumbled after investors began to recalibrate their portfolios to account for a more hawkish Federal Reserve.

Goldman Sachs expects the Fed to raise rates four times in 2022, compared to its previous forecast of three.read more

Traders have ramped up their rate hike expectations this year after the Fed's minutes from the December meeting suggested an earlier-than-expected rate rise.

The benchmark 10-year Treasury yield rose to its highest level in nearly two years, boosting value-oriented banks index (.SPXBK) to a fresh record high.read more

Tesla (TSLA.O) dropped 1.8% after Chief Executive Elon Musk tweeted on Friday that the electric carmaker will raise the U.S. price of its advanced driver assistant software.read more

Microsoft fell 2.5% after a media report that the software company has been losing its augmented-reality talent to peers like Meta Platforms.

Investors await inflation data this week for cues on consumer and producer prices, and whether they will sway the trajectory of the Fed's interest rate hikes.

At 12:18 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 457.01 points, or 1.26%, at 35,774.65, the S&P 500 (.SPX) was down 76.38 points, or 1.63%, at 4,600.65, and the Nasdaq Composite (.IXIC) was down 329.15 points, or 2.20%, at 14,606.75.

Nikefell 5.1% after HSBC downgraded the stock to "hold".

Declining issues outnumbered advancers for a 4.18-to-1 ratio on the NYSE and for a 3.89-to-1 ratio on the Nasdaq.The S&P index recorded 37 new 52-week highs and five new lows, while the Nasdaq recorded 58 new highs and 573 new lows.

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Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.