* VIX jumps to a seven-week high
* Weekly jobless claims slip below 1 mln
* Tesla drops for the third straight day
* Indexes fall: Dow 2.57%, S&P 3.27%, Nasdaq 4.56% (Updates to late afternoon, adds commentary, NEW YORK dateline, changes byline)
By Sinéad Carew
NEW YORK, Sept 3 (Reuters) – Wall Street’s main indexes tumbled on Thursday and were on track for their deepest one-day dives since June as investors dumped the high-flying technology sector, while economic data highlighted concerns about a long and difficult recovery.
The technology-centric Nasdaq led the declines as its heavyweight stocks took a hit including Facebook Inc , Apple Inc , Amazon.com Inc , Microsoft Inc and Google-parent Alphabet Inc which were all down between 4% and 7%.
The five stocks, deemed stay-at-home winners during the coronavirus crisis, also account for roughly a quarter of the S&P 500’s market value and have driven the stock market’s narrow technology-led recovery from the pandemic lows hit in March.
The Philadelphia chip index and the S&P tech sector also dropped more than 5% each.
The pullback comes a day after the S&P 500 and the Nasdaq closed at record levels and the Dow came within 1.5% of its February peak, powered by fiscal and monetary support hopes for a swift economic recovery. But some participants said investors had become too optimistic.
“Think about the mounting number of risks the market has been shrugging off over the last couple of months here,” said Emily Roland, co-chief investment strategist and John Hancock Investment Management. “We’re 60 days away from the election. That may be an area where investors are getting a bit spooked.”
She added: “Looking at the data today, the market has had the ability to power higher and hasn’t paid any attention to a macro environment which, yes, is improving which is encouraging, but the economy remains fragile here.”
Earlier in the day, data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained extraordinarily high. The closely watched monthly payrolls report is set for Friday a survey showed U.S. services industry growth slowed in August, likely as the boost from the reopening of businesses and fiscal stimulus faded. 2:40 p.m. EDT, the Dow Jones Industrial Average was down 749.17 points, or 2.57%, at 28,351.33, the S&P 500 lost 117.09 points, or 3.27%, to 3,463.75 and the Nasdaq Composite dropped 549.32 points, or 4.56%, to 11,507.12.
Wall Street’s fear gauge crossed its 200-day moving average to hit its highest level in seven weeks.
Still, some investors seemed unconcerned in the face of the sell-off.
“The prevalent attitude in the market now is that this is a healthy correction,” said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.
“(Investors) are in love with tech stocks and it’s going to take more than this for them to fall out of love with them.”
Another Nasdaq heavyweight, Tesla Inc , tumbled 8% after already falling sharply for two straight sessions.
PVH Corp (NYSE:) PVH.N rose 5.4% after the Calvin Klein owner posted a surprise quarterly profit, boosted by strong online demand for comfortable and casual clothing during the coronavirus-led shift to work from home. issues outnumbered advancing ones on the NYSE by a 3.62-to-1 ratio; on the Nasdaq, a 3.99-to-1 ratio favored decliners.
The S&P 500 posted 18 new 52-week highs and no new lows; the Nasdaq Composite recorded 24 new highs and 48 new lows.