(Reuters) - The main U.S. stock indexes tumbled on Thursday, arrested by a backpedaling tech sector that had led an epic recovery from pandemic lows, while Wall Street’s “fear gauge” soared and investors bought safe-haven Treasuries, pushing yields down.
The tech-heavy Nasdaq slid more than 5% as investors dumped high-flying technology-focused stocks, while economic data raised fears about a difficult and long recovery. The S&P 500 .SPX was briefly down more than 3% and Dow .DJI more than 2%.
* STOCKS: Dow down 1.95%, S&P 500 down 2.73%, Nasdaq down 4.21%
* BONDS: Benchmark 10-year notes US10YT=RR last rose 8/32 in price to yield 0.6266%, from 0.651% late on Wednesday. [US/]
* VIX: The Cboe Market Volatility Index .VIX was up 10.2% at 29.29
MIKE ZIGMONT, HEAD OF TRADING AND RESEARCH, HARVEST VOLATILITY MANAGEMENT, NEW YORK
“The pendulum of sentiment swung way too far into optimistic thinking. It was borderline euphoria, just stocks go up and up and up. And there was no such thing as a down day.
“There was this chase to get long and people are jealous of the gains that they were missing out on and they just poured in. And eventually that behavior exhausts itself and what we’re seeing is the exhaustion today, that’s my guess.
“It looks like the dip buyers are trying to make a move off of this intraday bounce. The sentiment has abruptly shifted and the various optimistic bulls might be second guessing the situation.”
RANDY FREDERICK, VICE PRESIDENT OF TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS
“I don’t know that it’s anything dramatic to worry about, but some of the stocks have gotten a little pricey and what the actual cause is to spark this sell off, sometimes it’s difficult to say. Something like only five stocks represent a full quarter of the whole Nasdaq in terms of capitalization so that does tend to make things a little more volatile. The more narrowly distributed any sort of move is in a small number of names, it only takes a couple of those names to have a big move, and you all of a sudden see a big downside.”
BRIAN BATTLE, DIRECTOR OF TRADING, PERFORMANCE TRUST CAPITAL PARTNERS, CHICAGO
“The market is being driven by momentum. You couldn’t explain the rallies recently because nothing’s really changed. This is the market trading back and forth on the lack of good or bad news. Heading into a long weekend here I’m sure there’s some positioning squaring going on.”
“This is market throat clearing and normal digestion before a holiday.”
“The super-giant mega-cap companies when they lose momentum it’s going to make the index fall.”
“We have a narrow market rally. Narrow markets beget fragility. When the narrow-rallying names sell off the indexes are going to sell off.”
Compiled by Alden Bentley and the Global Finance & Markets Breaking News team
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