Markets

Stock Market Today: Tech Stocks Tank in Stunning Market Downturn

2020's biggest winners turned tail Thursday in a widespread selloff that saw Apple (AAPL), Microsoft (MSFT) and other tech names sink.

The recent run to breathtaking stock valuations finally gave way in a big way Thursday. Despite little in the way of troubling macroeconomic triggers, the major indices started significantly lower and continued to weaken throughout the session.

Last week's jobless claims weren't disastrous – the seasonally adjusted 881,000 claims were 130,000 less than a week before, but much of the decline was chalked up to a change in the Labor Department's methodology.

"Since the Labor Department will only apply the new seasonal adjustment process to data beginning with this week's claims report and not adjust prior data, it injects uncertainty about how to interpret the week-to-week change in initial and continuing claims," write Barclays Investment Bank’s Michael Gapen and Pooja Sriram. "Altogether, while this week's jobless claims data, if taken at face value, point to a further improvement in labor market conditions, the introduction of new seasonal adjustment factors mean it is difficult to assess the degree to which conditions improved."

But Thursday's selling was vicious nonetheless, and worst among some of this year's biggest winners. Apple (AAPL, -8.0%), Amazon.com (AMZN, -4.6%), Microsoft (MSFT, -6.2%) and Tesla (TSLA, -9.0%) combined to shed about $440 billion worth of market value in one day, according to YCharts data, powering the Nasdaq Composite 5.0% lower to 11,458 in its worst single-day loss since June.

Other action in the stock market today:

  • All but two Dow Jones Industrial Average components declined in a 2.8% loss for the Dow, to 28,292.
  • Only about 11% of the companies in the S&P 500 (-3.5% to 3,455) finished in the black.
  • The small-cap Russell 2000 wasn't immune to the selling, shedding 3.0% to 1,544.

An Off Day, Or an Omen?

Reactions from the Wall Street community were unsurprisingly mixed, with views of today ranging anywhere from "blip" to "start of a major correction."

"This market has been due for a pullback," says Bankrate.com Chief Financial Analyst Greg McBride. "Actually, overdue. Putting today’s market pullback in context, this takes the S&P 500 all the way back to where it was – wait for it – last Wednesday. ... Volatility is normal and investors should be braced for more of it as we head closer to the election, and with valuations at high levels."

David Bahnsen, chief investment officer of California-based wealth manager The Bahnsen Group, says this might not necessarily be the start of a single-direction move for the entire market.

"Thursday's declines could very well be the start of the inevitable Nasdaq correction, but no one has any way of knowing that," he says. "So far, the move downward is rather hum-drum and immaterial.

“Down days where you see some of the financials and energy and REIT names up despite the Dow down 2.5% and Nasdaq down 5% clearly indicates rotation, not capitulation," adds Bahnsen, who encourages buying dips in energy stocks and financial firms.

But investors can't be blamed for being on red alert, given still-high unemployment and a still-growing number of corporate bankruptcies in the wake of COVID-19. Just know your options.

You can always take some chips off the table, as long as you know the ins and outs of raising cash. And if you are going to sell, consider checking out what Wall Street's "smart money" has been casting aside. Lastly, remember: While bonds – which you can access via these 12 bond mutual funds and ETFs – aren't generating much yield these days, they can still provide a bit of income while helping to insulate you from wilder swings in stocks.

Kyle Woodley was long AMZN and MSFT as of this writing.

Most Popular

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS updated its popular online tool so that you can track the status of your second stimulus check.
January 9, 2021
How a Third Stimulus Check Could Differ From Your First and Second Payments
Coronavirus and Your Money

How a Third Stimulus Check Could Differ From Your First and Second Payments

There's going to be a big push for a third round of stimulus payments. But the amount and eligibility rules for your third stimulus check could be dif…
January 12, 2021
Biden Calls for $1,400 Payments as Part of $1.9 Trillion Relief Package
Coronavirus and Your Money

Biden Calls for $1,400 Payments as Part of $1.9 Trillion Relief Package

Under Biden's plan for a third stimulus check, the $600 second-round stimulus checks would be increased to $2,000.
January 14, 2021

Recommended

Stock Market Today 1/15/21: New Stimulus Plan Fails to Stimulate Stocks
Stock Market Today

Stock Market Today 1/15/21: New Stimulus Plan Fails to Stimulate Stocks

Did Wall Street just "sell the news"? Stocks decline a day after Biden unveils $1.9 trillion "American Rescue Plan."
January 15, 2021
Stock Market Today 1/14/21: Small Caps Roar Despite Lousy Unemployment Data
Stock Market Today

Stock Market Today 1/14/21: Small Caps Roar Despite Lousy Unemployment Data

A spike in weekly initial jobless claims reversed recent progress and weighed on blue chips, but the Russell 2000 set fresh records once again.
January 14, 2021
Stock Market Today 1/13/21: Stocks Flat Amid Drama in D.C.
Stock Market Today

Stock Market Today 1/13/21: Stocks Flat Amid Drama in D.C.

The impeachment debate and light volume made for a choppy session that ended with the major indices little changed.
January 13, 2021
Stock Market Today 1/12/21: Stocks Grind Ahead, Tesla Keeps Sprinting
Stock Market Today

Stock Market Today 1/12/21: Stocks Grind Ahead, Tesla Keeps Sprinting

Tesla (TSLA) and energy stocks were high points of an otherwise subdued Tuesday of trading for the major indices.
January 12, 2021