* Biotech, momentum stocks lead Nasdaq down 1 pct
* Wider U.S. trade deficit to weigh on first-quarter GDP
* Dow off 0.2 pct; S&P 500 off 0.2 pct; Nasdaq down 1.1 pct
(Updates to afternoon)
By Angela Moon
NEW YORK, April 3 U.S. stocks fell on Thursday
afternoon, led by a sharp drop in biotech and momentum stocks,
including Facebook, Tesla and Netflix.
The Nasdaq fell 1.1 percent as investors sold some
of the market's biggest outperformers, mostly in the Internet
and biotech space, to take profits from recent gains.
Investors were also reluctant to make big bets ahead of
Friday's nonfarm payrolls report, when they will be looking for
evidence that recent weather-related weakness in the economy has
passed. In the latest week, U.S. jobless claims rose more than
expected, the Labor Department said on Thursday, but the
underlying trend still pointed to some strength in the job
"Momentum names are usually the ones that take the quickest
hit when investors get anxious or worried, in this case, a bit
of hesitancy ahead of tomorrow's payrolls," said Randy
Frederick, managing director of trading and derivatives at the
Schwab Center for Financial Research in Austin, Texas.
The Global X Social Media ETF, which includes
Facebook Inc, LinkedIn Corp and Groupon Inc
, dropped 3.1 percent. The Nasdaq biotechnology index
slid 3 percent.
The Dow Jones industrial average fell 26.40 points or
0.16 percent, to 16,546.60. The S&P 500 slipped 4.48
points or 0.24 percent, to 1,886.42. The Nasdaq Composite
dropped 45.172 points or 1.06 percent, to 4,231.284.
Both the Dow and the S&P 500 hit intraday record highs
during the morning, with the Dow climbing to 16,604.15, above
its record close set on Dec. 31. The S&P 500 rose as high as
Some analysts said the selloff in "momentum" stocks has yet
to run its course, though this could benefit more value-oriented
names. Buyers scooped up some of those companies' shares, which
helped to limit the Dow's decline. Intel Corp gained
2.1 percent to $26.43. American Express Co added 0.5
percent to $90.87.
Among momentum stocks, the shares of Tesla Motors,
the electric car maker, fell 2.4 percent to $224.90 and the
shares of Netflix Inc, the online movie rental company,
lost 2.6 percent to stand at $353.49.
The options market also focused on momentum stocks, with
Tesla Motors remaining a favorite with the speculative crowd for
a second day. The total option volume by afternoon was running
at about a 30 percent mark-up to what's typically seen.
Shares of Barnes & Noble Inc plunged 14.7 percent to
$18.87 after Liberty Media Corp said it has sold almost
all of its stake in the company, ending a nearly three-year bet
that the struggling retailer would emerge as a dominant seller
The S&P 500 now consists of 501 stocks, with the index
including both Google Inc's Class A and Class C
shares after the company's special dividend. Google's
Class A shares rose 0.5 percent to $570.88 while its Class C
shares gained 0.4 percent to $569.18.
On the economic front, the U.S. trade deficit unexpectedly
widened in February to $42.3 billion as exports hit a five-month
low, suggesting that first-quarter growth could be much weaker
than initially expected.
A bright spot came from the services sector, where growth
accelerated in March after being hampered by unusually cold
weather, according to the Institute for Supply Management's
In the biopharmaceutical sector, Gilead Sciences Inc
said late Wednesday that a trial of its hepatitis C
drug sofosbuvir, sold under the brand name Sovaldi in the United
States, showed the drug was safe and effective in treating
Japanese patients infected with a common form of the virus.
However, its stock slipped 0.7 percent to $73.44.
Vivus Inc shares tumbled 7.3 percent to $5.73 after
Piper Jaffray cut its rating on the pharmaceutical company's
stock to "underweight" from "neutral."
(Editing by Nick Zieminski and Jan Paschal)