STOCK MARKET : Tech Selloff
(Wed, 9 Sept 2020). The Dow and broader U.S. stock market face strong headwinds as Big Tech continues to unwind from its record rally.
The Dow Jones Industrial Average declined sharply on Tuesday; Nasdaq and S&P 500 also fell. Big Tech continues to unravel following last week’s flash crash. Democrats and Republicans are expected to announce details later this week on a new funding resolution that would avoid a government shutdown. The Dow and broader U.S. stock market opened lower on Tuesday, as plunging tech shares extended last week’s selloff of the major indexes.
Dow, S&P 500, Nasdaq Decline
All of Wall Street’s major indexes declined in the first session back from Labor Day, reflecting a volatile pre-market for U.S. stock futures. The Dow Jones Industrial Average fell 450 points or 1.6%. The broad S&P 500 Index of large-cap stocks plunged 2.1%. All 11 primary sectors reported declines, with energy stocks leading the pack. The energy sector fell by 3%. Information technology declined by 2.9%. Plunging tech shares weighed on the Nasdaq Composite Index, which fell 3.3%.
A measure of implied volatility known as the CBOE VIX spiked at the start of the holiday-shortened week. VIX rose more than 15% on Tuesday to 35.80 on a scale of 1-100, where 20 represents the historic average. The major indexes fell between 1.8% and 3.3% last week amid signs that the historic tech bubble was beginning to pop. It remains to be seen whether the tech-driven slide is a correction or the beginning of a more protracted bear market.
Mnuchin: Government Shutdown Will Be Avoided
Treasury Secretary Steven Mnuchin said Sunday that a deal to keep the government funded through the beginning of December would be finalized this week.
While the funding agreement ensures that federal agencies won’t shut down on Sept. 30, progress on a Covid-19 stimulus plan remains stalled in Congress. Democrats and Republicans have failed to reach a new funding resolution that would aid Americans impacted by the shutdowns–even after President Trump signed executive orders on Covid-19 relief.
Pandemic-induced shutdowns have decimated the U.S. economy, though signs of progress have emerged in recent months. Employers added nearly 1.4 million workers to payrolls last month as the national unemployment rate dropped to 8.4%.
The U.S. economy contracted 31.7% annually in the second quarter–the worst drop in recorded history.
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