Tech stocks resume sell-off as US stocks tumble

Traders work on the floor of the New York Stock Exchange. PHOTO: REUTERS

NEW YORK (AFP) - Tech shares resumed a sell-off on Thursday (Jan 13), leading US equities lower as investors readjust equity holdings amid expectations for higher interest rates.

After two up days, markets were back in the red following mixed economic data.

Mr Art Hogan, chief strategist at National Securities, said many growth-oriented tech stocks are still overvalued, given expectations that the United States Federal Reserve will soon lift interest rates.

"We're seeing some significant rotation out of tech," Mr Hogan said, noting the "decidedly more hawkish Fed" compared with earlier in the pandemic.

The tech-rich Nasdaq dropped 2.5 per cent to 14,806.81.

The Dow Jones Industrial Average shed 0.5 per cent to 35,113.62, while the broad-based S&P 500 tumbled 1.4 per cent to 4,659.03.

Wholesale prices for US goods and services eased somewhat in December, but still jumped 9.7 per cent for the year, the latest indication of pressure on prices.

New claims for unemployment benefits rose last week in a potential indication of the drag from the latest Covid-19 surge.

Mr Hogan said the upcoming earnings period could provide a catalyst to shift the recent trading pattern, which has seen tech shares generally under pressure.

Large banks including JPMorgan Chase are set to report results on Friday.

Among individual companies, Delta Air Lines rose 2.2 per cent as it reported a fourth-quarter loss but signalled it expects a strong travel rebound in spring if infections from the Omicron variant decrease.

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