US stocks, led by the Nasdaq Composite, closed lower to reverse most of April’s gains after mixed fresh US economic data fueled a selloff in tech shares and Small Corporation shares that until recently were the standout performers.
“Biotechs and tech were leaders and now they’ve reversed,” Peter Cardillo, chief market economist at Rockwell Global Capital in New York, told Reuters.
“Earnings don’t really support the valuations at this time, and I think the market needs to correct a bit. As we go into May I would say the best prescription would be to sell in May and go away.”
Declines in technology and biotech led the main indexes lower after severe selling pressure due to higher than usual volumes.
The selloff came amid fresh upbeat US economic data that shook the market sentiment after the Federal Reserve, in its statement, left the door open for a June interest rate hike.
The Dow Jones Industrial Average dropped 195 points or 1.1% to close at 17840.92. The blue chip Index is mow 0.4% on the month and flat for the year. It briefly turned negative for the year during its session low.
The Standard and Poor’s 500 Index fell by 21.34 points or 1% 2,085.51 but still remained about 0.9% in the positive for April. All of its 10 key sectors traded in the negative led by technology and healthcare.
The Nasdaq Composite tool the worst hit falling by more than 82.22 points or 1.6% to 4,941.412 points just a week after exceeding a 15 year record close. The tech heavy index is 0.9% higher on the month.
Technology shares declined sharply led by Apple Inc with a 2.5% plunge after the Wall Street Journal reported that a key component of the company’s smartwatch, Apple Watch, was defective.
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