Dow Falls Sharply as Wall Street Looks to Sell the Tech Rally

The Dow tumbled over 300 points Thursday, as tech selling returned with a vengeance following a sharp bounce on Wednesday.
US stock market
After temporary reprieve, the U.S. stock market sold off again on Thursday. | Image: AP Photo/Mark Lennihan
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  • The Dow Jones fell over 300 points Thursday.
  • Tech selling resumed as Wall Street looked to sell the rally.
  • Weekly jobless claims disappointed but remain below 900,000.

The Dow Jones tumbled on Thursday, as initial jobless claims missed forecasts. Wednesday’s frenzied rally appears to be slowing as Wall Street sells the rally following months of buying all the dips.

Dow Jones Falls After Weaker Than Expected Jobless Claims Data

All three major U.S. stock indices came under pressure, with the Dow Jones, S&P 500, and Nasdaq falling more than 1%.

Dow Jones, Stock Market
The Dow Jones fell 350 points as tech selling resumed. | Source: Yahoo Finance

On the data front, initial jobless claims missed forecasts, and continuing claims held above 13 million, also missing expectations. Watch the video below:

While the Dow bulls are optimistic that the job gains can continue, Europe is casting doubts about the potential for recovery. Spain and France are enduring a record high number of coronavirus cases, and the U.K. is tightening restrictions on gatherings.

If the U.S. experiences a second wave, it could undermine the recent recovery efforts. One silver lining is that, so far, deaths have not tracked directly with spiking cases in Europe, suggesting the worst of the human toll is hopefully over.

Elsewhere, crude oil inventories rose more than 2 million barrels against expectations of a 1.3 million-barrel draw. This is particularly meaningful as it confirms Saudi Arabia’s stance that demand for its exports is softening.

Additional worries for the U.S. stock market came from the Senate’s failure to pass its “skinny” coronavirus stimulus bill.

Nordea Sees Some Durability In Lofty Tech Valuations

Despite bouts of extreme volatility, investors looking for an imminent collapse in the Dow Jones could be disappointed. Investors are now overly conditioned to high valuations, and any dips are being snapped up aggressively.

The trend may have become a “sell the rally” scenario, as billionaire investor Mike Novogratz recently claimed, but it is still too early to know for sure. Watch the video for more:

Sebastian Galy at Nordea Asset Management told CCN.com that valuations could remain high so long as interest rates remain low:

Fashionable sectors such as Growth or ESG are set to stay very expensive for a long time seeing some improvements as earnings improve with the business cycle (expectations for Growth being already high)… Things should get very unpleasant with increasing probability in 2022/2023 as forward rates price in a belayed or overly aggressive Fed tightening.

Dow 30 Stocks: Apple Struggles As Tech Volatility Returns

After a brief respite, volatility returned on Thursday and pushed the Dow 30 lower. The tech sector was clearly under pressure, with Apple stock posting a 1.7% loss.

Fellow tech giant Microsoft was also under pressure, tumbling 1.4%.

Amid a mostly red Dow Jones, a few stocks were moving into the green, with Walt Disney rallying around 1% after the highly successful roll-out of its Mulan reboot. Food and beverage giant Coca-Cola also managed to rally, climbing 0.5%.

Sam Bourgi edited this article for CCN - Capital & Celeb News. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

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