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This Is Why the Stock Market Just Suddenly Lurched Lower

Last Updated September 23, 2020 1:58 PM
Sam Bourgi
Last Updated September 23, 2020 1:58 PM
  • After gaining as much as 1.5%, the S&P 500 Index turned negative Wednesday morning.
  • The technology-heavy Nasdaq Composite Index plunged 2.1%.
  • FAANG stocks are down across the board.

U.S. stocks turned negative Wednesday morning, weighed down by plunging technology shares and negative virus headlines .

S&P 500, Nasdaq Decline; Dow Holds Gains

The large-cap S&P 500 Index reached an intraday high of 3,021.72 before pulling back sharply mid-morning. It bottomed at 2,969.75 for a decline of 1.7% from its intraday peak.

S&P 500 Index
The S&P 500 Index suffered a sharp pullback Wednesday morning but has since pared most of its losses. | Chart: Yahoo Finance 

Losses are concentrated in five of 11 primary sectors , with information technology leading the declines. Health care, communication services, and discretionary shares also fell sharply.

The technology-focused Nasdaq Composite Index declined by as much as 2.1% before paring losses. It was last down 1.6%.

Surging bank shares  helped the Dow Jones Industrial Average buck the downtrend. The industrials benchmark rallied by as much as 360 points.

Tech Stocks Lead Declines

The S&P 500 and Nasdaq are being weighed down by volatile technology shares, with all five FAANG constituents reporting declines.

As CNBC reports , shares of Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), and Google-parent Alphabet (NASDAQ:GOOGL) are all down at least 0.5%.

The S&P 500 briefly eclipsed 3,000 on Wednesday, a significant psychological and technical milestone for investors. The 3,000 level represents the index’s average price over the past 200 days .

Stocks have rebounded more than 30% from their March lows, but not everyone believes the rally can last. Analysts at JPMorgan have warned investors to brace for a significant pullback heading into the summer due to the lingering effect of government lockdown orders.

Although the U.S. economy is entering a recession, some analysts believe a “depression” is less likely:

The U.S. economy showed tentative signs of recovery midway through the second quarter, but surging unemployment claims suggest a deep recession is all but inevitable.

On Thursday, the Department of Labor is expected to show another 2.1 million jobless claims  for the week ending May 23, bringing the ten-week total to over 40 million.