US STOCKS-Tech slide hits Wall Street as coronavirus cases spiral

US STOCKS-Tech slide hits Wall Street as coronavirus cases spiral

Reuters  | Oct 31, 2020 02:50

US STOCKS-Tech slide hits Wall Street as coronavirus cases spiral

* Twitter slumps as user growth disappoints
* Apple, Amazon, Facebook drop after results
* Alphabet rises as businesses resume ad spending
* Indexes down: Dow 1.71%, S&P 2.12%, Nasdaq 3.08%

(New throughout, updates prices, market activity and comments
to mid-afternoon)
By Herbert Lash
NEW YORK, Oct 30 (Reuters) - Major U.S. stock indexes
tumbled on Friday, dragged by losses in tech heavyweights that
had been priced for perfection, and a record rise in coronavirus
cases fed the glum mood along with presidential election
The three main indexes headed toward their worst week since
the market's lows in March on prospects of wider COVID-19
restrictions in Europe, while surging U.S. cases pushed
hospitals to the brink of capacity. The CBOE volatility index .VIX held at a 20-week high, a
sign of jitters ahead of the final weekend before Election Day
on Tuesday.
"We're two market days away from Election Day and people
want to make sure that they're not completely caught off guard,"
said Pete Santoro, a Boston-based equity portfolio manager at
Columbia Threadneedle.
The S&P 500 has fallen about 9.4% since hitting an all-time
high in early September in a rally driven by the tech mega caps
whose quarterly results this week failed to meet optimistic
Apple Inc AAPL.O tumbled about 6.1% after it posted the
steepest drop in quarterly iPhone sales in two years due to the
late launch of new 5G phones. Inc AMZN.O fell 5.48% after it forecast a jump
in costs related to COVID-19, while Facebook Inc FB.O shed
7.04% as it warned of a tougher 2021. "All these names are eventually going to be repriced,
they're all ridiculously valued. It's just that I don't know
when and I don't know from what stratospheric valuation they
inevitably reprice," said David Bahnsen, chief investment
officer at The Bahnsen Group in Newport Beach, California.
Communication services .SPLRCL got a boost from a 3.6%
jump in shares of Alphabet Inc GOOGL.O after the Google parent
beat estimates for quarterly sales as businesses resumed
advertising. Google may have benefited as it has been trading at about 36
times earnings, far less than the 119 times earnings valuation
of Amazon, Bahnsens said.
"There is a big selloff in those big tech names because they
didn't live up to the hype and people are really worried about
next week's election," said Kim Forrest, chief investment
officer at Bokeh Capital Partners in Pittsburgh.
Republican President Donald Trump has consistently trailed
Democratic challenger Biden in national polls for months, but
polls have shown a closer race in the most competitive states
that could decide the election. At 2:31 p.m. ET (1831 GMT), the Dow Jones Industrial Average
.DJI fell 432.05 points, or 1.62%, to 26,227.06. The S&P 500
.SPX lost 67.47 points, or 2.04%, to 3,242.64 and the Nasdaq
Composite .IXIC dropped 337.07 points, or 3.01%, to 10,848.53.
The third-quarter earnings season is almost past its halfway
mark, with about 86.2% of S&P 500 companies topping earnings
estimates, according to Refinitiv data. Overall, profit is
expected to fall 10.3% from a year earlier.
Twitter Inc TWTR.N slumped about 21.1% after the
micro-blogging site added fewer users than expected and warned
the U.S. election could affect ad revenue. Declining issues outnumbered advancing ones on the NYSE by a
2.60-to-1 ratio; on Nasdaq, a 3.07-to-1 ratio favored decliners.
The S&P 500 posted three new 52-week highs and one new low;
the Nasdaq Composite recorded 18 new highs and 71 new lows.

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