(Reuters) – The Nasdaq index fell more than 2% on Tuesday as investors sold off mega-cap growth stocks on valuation concerns, while keeping a close eye on Federal Reserve Chairman Jerome Powell’s testimony in Congress.
Shares of Netflix Inc, Alphabet Inc, Microsoft Corp, Amazon.com Inc and Apple Inc slipped between 1.5% and 3.5% in early trading.
“There’s definitely an assumption that inflation has crept and bled through and we are starting to see some impact of that assumption in the growth style of investing,” said Keith Buchanan, portfolio manager at GlobAlt in Atlanta.
“It’s hard to imagine a scenario in which there’s upside to the larger broader market if those large cap growth stocks don’t lead the way.”
The Nasdaq fell to its lowest in nearly a month moments after the opening bell, and is now set to post its biggest two-day loss since early September.
Seven of the 11 major S&P 500 sectors were trading in the red, with consumer discretionary, technology and communication services among the top three decliners.
Powell said the U.S. economic recovery remains “uneven and far from complete” and it will be “some time” before the Fed considers changing policies it adopted to help the country back to full employment.
The Fed chief appeared before the Senate Banking Committee for the first time since Democrats won the White House and control of both chambers of Congress.
Value stocks, which are poised to benefit from an economic rebound, have outperformed growth shares in February.
A slump in bitcoin hurt shares of Tesla Inc, which had invested $1.5 billion in the cryptocurrency recently. The electric-vehicle maker tumbled 6.6% and was set to plunge into the red for the year.
Cryptocurrency miners Riot Blockchain Inc and Marathon Patent Group Inc plunged more than 22.0% each, while bitcoin bank Silvergate Capital Corp slid 22.7%.
At 10:18 a.m. ET the Dow Jones Industrial Average was down 184.17 points, or 0.58%, at 31,337.52, the S&P 500 was down 40.54 points, or 1.05%, at 3,835.96, and the Nasdaq Composite was down 329.36 points, or 2.43%, at 13,203.69.
Home Depot Inc fell 5.8% after the home improvement retailer warned it was unable to predict how consumer spending would evolve this year.
Occidental Petroleum Corp dropped 1.5% after the oil producer posted a larger-than-expected fourth-quarter loss.
Declining issues outnumbered advancers for a 3.20-to-1 ratio on the NYSE and a 5.77-to-1 ratio on the Nasdaq.
The S&P index recorded 36 new 52-week highs and no new low, while the Nasdaq recorded 109 new highs and 50 new lows.
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