Stock markets extended losses on Friday after technology stocks plunged the day before, overshadowing generally positive news about job numbers in the U.S. and Canada.
The tech-heavy Nasdaq dropped four per cent as huge companies like Apple Inc, Microsoft Inc, Amazon.com Inc, Tesla Inc and Nvidia Inc. all slipped.
After climbing to record highs on the back of historic stimulus and a narrow rally in heavyweight technology stocks, the S&P 500 and Nasdaq suffered their worst day in nearly three months on Thursday as investors pulled money out of pervious hot tech stocks.
The exact cause of the sell-off is difficult to decipher, but market watchers said that after technology shares did so well during the pandemic because people were cooped up at home using online services, a pullback is to be expected.
“The plunge after overly exuberant rallies of recent was in itself not counter-intuitive; but the precise motivation of, and triggers for, market moves remains an enigma,” said Riki Ogawa of Mizuho Bank.
Technology, communication services and consumer discretionary stocks fell the most among the major S&P sectors. But even after the sudden sell off, technology shares are still well up from where they were a few months ago. Apple shares are up 65 per cent for the year, and Amazon is up 82.3 per cent.
The share price for video conferencing app Zoom has gone up 460 per cent this year.
The gloom in tech overshadowed generally positive numbers about the employment picture, as Canada’s jobless rate fell to 10.2 per cent while the U.S. rate is even lower, down to 8.4 per cent.
Those new jobs weren’t enough to convince investors to buy stocks, though.
The Dow Jones Industrial Average and the S&P 500 were off by about two per cent nearing midday, while the technology-focused Nasdaq was doing twice as bad, off another four per cent after losing five per cent on Thursday.
Losses extended to the Toronto Stock Exchange, too, where the benchmark S&P/TSX Composite Index was down about 300 points or almost two per cent.