Tech Stocks Drag Wall Street Into Negative Territory

The Dow posted a slight loss after five sessions of gains. Stocks rebounded somewhat after reports that US President Joe Biden offered to scrap his proposed tax hike. In talks with Republicans, the Democrat offered to drop plans to hike corporate rates as high as 28 percent, and instead set a 15 percent minimum tax rate for companies, sources said.

A better-than-expected US weekly unemployment report and private payrolls numbers for May pointed to strengthening labour conditions, ahead of the closely watched US payrolls report due on Friday. A measure of service sector activity increased to a record high.

Investors are focused on whether robust economic reports could prompt the Fed to pare back monetary support put in place during the coronavirus pandemic sooner than expected.

"The market is digesting strong economic data with some inflationary pressures and factoring in whether this will change the timing of Fed tapering and how to factor that into stock prices," said Brad Neuman, director of market strategy at Alger in New York.

Sparking fears over easing support was the Fed's announcement on Wednesday that it will begin to unwind its corporate bond holdings acquired last year through an emergency lending facility launched to calm credit markets at the height of the pandemic.

The Dow Jones Industrial Average fell 0.07 percent, to 34,577; the S&P 500 lost 0.36 percent, at 4,193; and the Nasdaq Composite dropped 1.03 percent, to 13,615.

The heavyweight S&P 500 tech sector fell 0.9 percent Tech and other growth stocks are seen as particularly vulnerable if inflation drives up bond yields and more heavily discounts the value of future cash flows.

Frenzied trading continued in retail investor favorite AMC Entertainment Holdings. After big swings, AMC shares ended down 17.9 percent after the theater chain operator said it completed a share offering it announced earlier in the day. (Reuters)