Tech Stocks Slump To Pull Wall Street Down Further

US stock indexes closed lower on Friday to cap Wall Street's biggest weekly sell-off since March, as losses in richly priced tech heavyweights, a record rise in coronavirus cases and jitters over the presidential election snuffed investor sentiment.

The pandemic pushed US hospitals to the brink of capacity as coronavirus cases surpassed 9 million, while the prospect of wider Covid-19 restrictions in Europe raised concerns about the economic recovery.

The CBOE volatility index closed just below a 20-week high, a sign of investor jitters ahead of the final weekend before US election day on Tuesday. The main indexes pared steeper losses toward the closing bell, with the Dow down less than 1 percent.

"We're two market days away from election day and people want to make sure that they're not completely caught off guard," said Pete Santoro, a Boston-based equity portfolio manager at Columbia Threadneedle.

The S&P 500 has fallen about 8.9 percent since hitting an all-time high in early September in a rally driven by the tech mega caps whose quarterly results this week failed to meet highly optimistic expectations.

Apple tumbled 5.6 percent after it posted the steepest drop in quarterly iPhone sales in two years due to the late launch of new 5G phones.

Amazon.com slid 5.45 percent after it forecast a jump in costs related to Covid-19, while Facebook fell 6.3 percent as it warned of a tougher 2021.

"All these names are eventually going to be repriced, they're all ridiculously valued. It's just that I don't know when and I don't know from what stratospheric valuation they inevitably reprice," said David Bahnsen, chief investment officer at The Bahnsen Group in Newport Beach, California.

Communication services got a boost from a jump in shares of Alphabet after the Google parent beat estimates for quarterly sales as businesses resumed advertising.

Google may have benefited as it has been trading at about 36 times earnings, far less than the 119 times earnings valuation of Amazon, Bahnsens said.

"There is a big sell-off in those big tech names because they didn't live up to the hype and people are really worried about next week's election," said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

The Dow Jones Industrial Average fell 0.59 percent, to 26,502. The S&P 500 lost 1.21 percent, to 3,270 and the Nasdaq dropped 2.45 percent, to 10,912.

For the week, the Dow fell 6.5 percent, the S&P 500 5.6 percent and the Nasdaq 5.5 percent. (Reuters)