US stocks tumble as tech share rebound falters
Fears of new trade tensions with China drive main indexes lower.
Wall Street’s top indices fell as a rebound in tech shares tumbled, adding to losses triggered by fears of new trade tensions.
After a mixed day on European equity markets, losses on Wall Street were broad-based on Thursday, with energy the only one of 11 industrial sectors to advance in the S&P 500.
The Dow, which had notched records the last three days, led major indices lower with a 1.3 percent drop.
“It doesn’t take much of an excuse for markets to take some profits when they’ve had such a good run,” said Art Hogan, chief market strategist at B Riley Wealth.
Market watchers have for days fixated on the “overbought” state of tech shares after outsized gains by artificial intelligence stocks so far in 2024.
The “VIX” volatility index rose by about 10 percent in a move that some tied to political pressure building on US President Joe Biden to exit the 2024 campaign.
Spartan Capital’s Peter Cardillo said speculation about Biden “could create some short-term election anxiety” after more investors expected a win by Donald Trump following the June presidential debate.
Europe’s major stock markets ended the day mixed, with London getting a boost from the previous day’s oil price surge.
Oil prices had vaulted 2 percent higher on Wednesday after signs of strengthening crude demand in top consumer the United States, though the market stabilised on Thursday.
The dollar firmed following losses caused by growing expectations that the US Federal Reserve would cut interest rates at least once this year.
As expected, the European Central Bank (ECB) on Thursday kept its key interest rates steady as it waits for firm indications that consumer price rises are stable before reducing borrowing costs again.
The bank kept the key deposit rate at 3.75 percent after the first cut in June ended an unprecedented streak of hikes to tame runaway inflation.
But ECB chief Christine Lagarde said there was no predetermined rate path and that the decision at September’s meeting was “wide open” and would depend upon the data.
On Wednesday, tech firms took a hit after a report said US President Joe Biden would target companies supplying China with key semiconductor technology.
Biden is reportedly looking at imposing strict curbs on companies including Tokyo Electron and Dutch firm ASML if they continue allowing Beijing access to their chip tech.
Sentiment was also dented by Trump’s comments that crucial chip supplier Taiwan – home to TSMC and other major producers – should pay the US for helping the island defend itself militarily against China.
