Wall St tumbles as tech rally loses steam, economic data weighs

Wall Street's main indexes fell on Thursday as technology-focused stocks lost strength, while elevated jobless claims and a slowdown in services sector fueled fears of a slow and prolonged economic recovery.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained extraordinarily high. The government's closely watched monthly payrolls report is set for Friday.

Separately, a survey showed US services industry growth slowed in August, likely as the boost from the reopening of businesses and fiscal stimulus faded.

"We're going to struggle to put people back to work, it's going to be another three to four years and then we have to sustain it," said Greg Hahn, chief investment officer at Winthrop Capital Management in Indiana.

Unprecedented fiscal and monetary support as well as increasing bets on stay-at-home tech stocks have been powering the US stocks markets in the recent weeks.

While the S&P 500 and Nasdaq have notched new highs, the blue-chip Dow is still about 2% short of its pre-crisis high hit in February.

Apple Inc, Netflix, Microsoft Corp and Amazon.com Inc, that have boosted the broader indexes from their pandemic-led crash, slipped between 1.2% and 3.7%.

The technology sector dropped 2.9%, while communication services and consumer discretionary declined about 1% each.

Tesla Inc tumbled 6.1%, falling for the third straight session.

"There's going to be a rotation at some point in time. There is this notion that we are closer to a vaccine, and everybody will get protected and we'll get back to normal by the end of the year," Hahn said.

Financial and energy sectors, the two worst performing S&P sectors this year, were in a bright spot, jumping 0.8% and 1.2%, respectively.

At 10:17 a.m. ET, the Dow Jones Industrial Average was down 125.34 points, or 0.43%, at 28,975.16, the S&P 500 was down 39.17 points, or 1.09%, at 3,541.67. The Nasdaq Composite was down 276.01 points, or 2.29%, at 11,780.44.

PVH Corp rose 6% after Calvin Klein owner posted a surprise quarterly profit, boosted by strong online demand for comfortable and casual clothing during the coronavirus-led shift to work from home.

Declining issues outnumbered advancers for a 1.18-to-1 ratio on the NYSE and for a 1.69-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and no new low, while the Nasdaq recorded 22 new highs and 19 new lows.