U.S. stocks were slammed today, with high-flying technology and biotech shares leading the declines that had the Nasdaq Composite posting its worst session in more than two years.
“The market is coming to its senses in some of the high-flying tech names; it looked like there were some pretty hefty amounts being paid for the prospect of eventual earnings. Any of us in the market more than 15 years feels the hot breath on the backs of our necks when we see such high prices being paid for tech stocks,” said Jerry Webman, chief economist at Oppenheimer Funds.
“One of the interesting ironies is when you see a shift towards stocks with pretty low prices and away from momentum that tends to happen when the underlying economy is still growing,” Webman added.
The Nasdaq Composite declined as much as 141 points, and ended down 129.79 points, or 3.1 percent, at 4,054.11, its hardest hit since November of 2011.
Momentum stocks including Tesla Motors, Facebook, Google, Priceline Group and Amazon.com declined, along with biotechnology companies, with Pacific Biosciences of California, Zogenix and ChemoCentryx among those hit.
“Clearly investors are nervous about high-flying momentum stocks. There is a rethink on whether better earnings and economic data will support a resumption of the momentum that was driving biotechnology and higher-flying technology stocks earlier in the year,” said Kate Warne, investment strategist at Edward Jones.
“We’re back to a valuation focus; investors are gravitating towards something tangible, like earnings and revenue,” said Jack Ablin, chief investment officer at BMO Private Bank.
“We’re entering earnings season and they are not going to have much to show. Investors want to see earnings and cash flow,” said Ablin of new technology and biotech firms that have seen their shares run-up on bets for future performance.
After a 283-point plunge, the Dow Jones Industrial Average shed 266.96 points, or 1.6 percent, to 16,170.22, with American Express leading losses that extended to all but two of its 30 components.
The S&P 500 declined 39.10 points, or 2.1 percent, to 1,833.08, with health care and technology pacing losses that extended to all 10 of its major industry sectors.
Read more at CNBC.