* Tiffany drops as LVMH warns it is set to walk away from takeover
* Tesla climbs after losing a third of its value in 10 days
* Tech stocks lead gains among components
* Futures up: Dow 0.69%, S&P 0.89%, Nasdaq 1.38% (Adds comment, details; Updates prices)
By Medha Singh and Devik Jain
Sept 9 (Reuters) – Wall Street’s main indexes were on track to open higher on Wednesday, as technology-focused companies climbed following three sessions of intense selling that sent the Nasdaq Composite index lower by 10%.
Tesla Inc’s shares climbed 6.3% in premarket trading after shedding about a fifth of their value in the previous session, following its surprise exclusion from the S&P 500. Inc , Salesforce.com Inc (NYSE:) CRM.N and Microsoft Corp , which have borne the brunt of the tech rout, led gains among the Dow Jones Industrials’ 30 components.
The tech-heavy Nasdaq tumbled 4.1% on Tuesday, bringing total losses since Sept. 2 to 10%, with declines also led by stocks such as Amazon.com Inc , Facebook Inc and Netflix Inc after a rally dominated by the so-called “stay-at-home” winners.
The correction has partly been driven by worries that sellers of call options would unwind massive amounts of stocks that they bought during the run up in U.S. stocks as hedges.
Media reports said SoftBank Group Inc has made big bets on equity derivatives tied to tech firms, while retail investors paid $40 billion of premium on call options in the past month, data from derivatives clearing organization OCC showed.
In signs of growing unease about the positioning in tech stocks, a measure of demand for protective put options in relation to call options, used to bet on upside, has risen sharply. gyrations are expected to increase in the run-up to Nov. 3 U.S. presidential elections, with September and October also historically the most volatile two-month stretch of the year.
Still, analysts said they did not expect a prolonged sell-off in U.S. stocks against the backdrop of an easy monetary policy by the Federal Reserve.
“We will be seeing the correction in the tech stocks continue for a little bit longer, but I don’t think that we are headed for a new bear market,” said Sam Stovall, chief investment strategist at CFRA in New York.
Later this week, the U.S. Senate also aims to vote on a drastically scaled-back Republican coronavirus aid bill, despite opposition from Democrats who are needed for any measure to be enacted into law. 8:37 a.m. ET, 1YMcv1 were up 191 points, or 0.69%, S&P 500 e-minis EScv1 were up 29.75 points, or 0.89%, and NQcv1 were up 152.75 points, or 1.38%.
Wall Street’s fear gauge slipped further away from near three-month highs, as stock markets also shrugged off news about AstraZeneca pausing global trials of its experimental COVID-19 vaccine after an unexplained illness in a participant. Athletica Inc dropped 4.4% after the yogawear maker forecast a drop in current-quarter adjusted profit due to higher marketing expenses. & Co TIF.N tumbled 9% after French luxury goods giant LVMH warned it was set to walk away from its planned $16 billion takeover of the U.S. jeweler due to complications arising over the deal. The taller they grow …