Wall Street closes sharply lower on tech selloff

NEW YORK: Wall Street dropped sharply on Thursday as investors fled market-leading tech shares due to mixed earnings reports and growing signs of a worsening coronavirus pandemic, which could exacerbate a deep economic recession.

The sell-off steepened after a tech watchdog group reported that Apple Inc faces consumer protection investigations in multiple states.

The bellwether S&P 500 slid more than 1%, snapping a four-day winning streak with its biggest daily percentage drop in nearly four weeks. All three major US stock averages lost ground, with falling momentum stocks Apple, Microsoft Corp and Amazon.com weighing heaviest.

"There has been a real disparity between growth and value and the narrowing has begun," said Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco. "There was also a significant delta between large cap and small cap and we're seeing that narrow as well."

The Russell 2000 and the S&P Smallcap 600, both small cap indexes, outperformed the broader market.

US jobless claims unexpectedly ticked higher to 1.416 million last week, the Labor Department said.

The number excludes recipients of Pandemic Unemployment Assistance, set to expire on July 31.

Congress kept working to pass new stimulus before that deadline continued, with Senate Republicans announcing they could present their version of the bill to Democrats as early as this week.

Total US coronavirus cases topped 4 million on Thursday, with nearly 2,600 new cases every hour, on average, according to a Reuters tally.

"There's so much uncertainty about stimulus, the election, earnings, the racial landscape and geopolitical tensions," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York. "And underlying everything is the uncertainty about COVID-19 and the re-opening process."

Unofficially, the Dow Jones Industrial Average fell 353.64 points, or 1.31%, to 26,652.2, the S&P 500 lost 40.37 points, or 1.23%, to 3,235.65 and the Nasdaq Composite dropped 244.71 points, or 2.29%, to 10,461.42.

Second-quarter reporting season is in full-stride, with 113 S&P 500 constituents having reported. Refinitiv data shows that 77% of those have beaten expectations that were extraordinarily low. Analysts now see aggregate second-quarter S&P earnings plummeting by 40.8%, year-on-year, per Refinitiv

Microsoft Corp shares fell after reporting its cloud computing business Azure reported its first-ever quarterly growth under 50%.

Tesla Inc reported a profit for the fourth straight quarter, setting the company up for inclusion in the S&P 500. But the stock slid as analysts questioned whether the electric automaker's stock price matched its performance.

American Airlines Group Inc jumped after announcing it would rethink the number of flights to add in August and September. Also, it reported an adjusted loss per share of $7.82.

Airlines, battered by mandated lockdowns, reversed early losses, with the S&P 1500 Airlines index ending the session well into the black.

Twitter Inc advanced after reporting its highest-ever annual growth of daily users.