NEW YORK (REUTERS) - Wall Street dropped sharply on Thursday (July 23) as investors fled market-leading tech shares due to mixed earnings reports and growing signs of a worsening coronavirus pandemic, which could exacerbate a deep economic recession.
The sell-off steepened after a tech watchdog group reported that Apple faces consumer protection investigations in multiple states.
The bellwether S&P 500 slid more than 1 per cent, snapping a four-day winning streak with its biggest daily percentage drop in nearly four weeks.
All three major US stock averages lost ground, with falling momentum stocks Apple, Microsoft and Amazon.com weighing heaviest.
"There has been a real disparity between growth and value and the narrowing has begun," said Stephen Massocca, senior vice-president at Wedbush Securities in San Francisco. "There was also a significant delta between large cap and small cap and we're seeing that narrow as well."
The Russell 2000 and the S&P Smallcap 600, both small cap indexes, outperformed the broader market.
US jobless claims unexpectedly ticked higher to 1.416 million last week, the Labour Department said.
The number excludes recipients of Pandemic Unemployment Assistance, set to expire on July 31.
Congress kept working to pass new stimulus before that deadline continued, with Senate Republicans announcing they could present their version of the bill to Democrats as early as this week.
Total US coronavirus cases topped 4 million on Thursday, with nearly 2,600 new cases every hour, on average, according to a Reuters tally.
"There's so much uncertainty about stimulus, the election, earnings, the racial landscape and geopolitical tensions," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth in New York.
"And underlying everything is the uncertainty about Covid-19 and the re-opening process."
The Dow Jones Industrial Average fell 353.51 points, or 1.31 per cent, to 26,652.33, the S&P 500 lost 40.36 points, or 1.23 per cent, to 3,235.66 and the Nasdaq Composite dropped 244.71 points, or 2.29 per cent, to 10,461.42.
Of the 11 major sectors in the S&P 500, eight closed in the red, with tech shares notching the largest percentage drop.
Second-quarter reporting season is in full-stride, with 113 S&P 500 constituents having reported.
Refinitiv data shows that 77 per cent of those have beaten expectations that were extraordinarily low.
Microsoft dropped 4.3 per cent after reporting its cloud computing business Azure reported its first-ever quarterly growth under 50 per cent.
Tesla reported a profit for the fourth straight quarter, setting the company up for inclusion in the S&P 500.
But the stock slid 5.0% as analysts questioned whether the electric automaker's stock price matched its performance.
American Airlines Group Inc jumped 3.7 per cent after announcing it would rethink the number of flights to add in August and September. Also, it reported an adjusted loss per share of US$7.82.
Airlines, battered by mandated lockdowns, reversed early losses to cross well into the black. The S&P 1500 Airlines index gained 1.3 per cent.
Twitter rose 4.1 per cent after reporting its highest-ever annual growth of daily users.
Declining issues outnumbered advancing ones on the NYSE by a 1.18-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favoured decliners.
The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite recorded 103 new highs and 17 new lows.
Intel said after the bell that its new 7nm chip technology was six months behind schedule, which sent its shares down more than 8 per cent in extended trading.
Volume on US exchanges was 10.77 billion shares, compared with the 11.14 billion average over the last 20 trading days.
