Wall Street falls as tech stocks sink again, jobless claims still high

Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort
FILE PHOTO: Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston

September 17, 2020

By Caroline Valetkevitch

(Reuters) – U.S. stocks dropped on Thursday as technology-related shares extended a recent slide and as data showed high levels of weekly jobless claims.

Apple Inc <AAPL.O> and Amazon.com Inc <AMZN.O> were among the biggest drags on the S&P 500 and Nasdaq, which entered correction territory this month.

From the March market lows, “this has been an amazing recovery represented by a few good tech names,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

“They had an incredible last week of August, and I think this is a rational profit-taking scenario at the moment.”

He expects tech-related names to bounce back before the end of the year.

While the S&P 500 technology index <.SPLRCT> weighed the most on the benchmark index, the S&P 500 real estate sector <.SPLRCR> and financials <.SPSY> also sold off sharply.

Adding to concerns around a stalling recovery, the Labor Department’s report showed the number of Americans filing new claims for unemployment benefits fell last week, but remained perched at extremely high levels.

On Wednesday, the Federal Reserve pledged to keep interest rates low for a prolonged period to lift the world’s biggest economy out of a pandemic-induced recession.

Unofficially, the Dow Jones Industrial Average <.DJI> fell 129.94 points, or 0.46%, to 27,902.44, the S&P 500 <.SPX> lost 28.42 points, or 0.84%, to 3,357.07 and the Nasdaq Composite <.IXIC> dropped 140.19 points, or 1.27%, to 10,910.28.

Fed Chair Jerome Powell laid out a menu of factors – including wage growth, workforce participation and disparities in minority joblessness relative to whites – that must be satisfied before the Fed would view the economy at maximum employment, and thus even consider raising interest rates.

“Investors love when the Fed lowers rates, because they feel that’s good for market,” Dollarhide said. “But if the Fed says we need to keep rates low for longer, then people start worrying about the economy itself.”

General Electric Co <GE.N> rose after Chief Executive Officer Larry Culp said on Wednesday the company’s free cash flow would turn positive in the second half.

Ford Motor Co <F.N> gained as it said it had begun production of the new generation F-150 pickup truck at its Michigan facility.

(Additional reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Sagarika Jaisinghani, Shounak Dasgupta and David Gregorio)