NEW YORK: Stocks are off to good start on Wall Street, a day after more steep drops in big technology companies pulled indexes sharply lower. Some of those tech giants were climbing early Wednesday, including Apple and Microsoft. The S&P 500 was up 1.3% and the tech-heavy Nasdaq reclaimed 1.7%, a day after shedding 4.1%. European markets rose, and crude oil prices were also higher. Slack Technologies slumped 16% after the fast-growing instant messaging service reported disappointing billing figures, and Tiffany dropped 10% after the French luxury goods giant LVMH said it was ending its bid for the storied jewelry seller.
THIS IS A BREAKING NEWS UPDATE. APs earlier story appears below.
European stocks and U.S. futures advanced Wednesday after a day of losses in Asia following a sell-off of big technology stocks on Wall Street.
Germany’s DAX jumped 1.2% to 13,127.44 and the FTSE 100 in London added 1% to 5,987.92. The CAC 40 in France also rose 1%, to 5,024.31. A rebound in U.S. futures augured gains for Wall Street, with the contract for the S&P 500 up 0.9% while the Dow future gained 0.7%.
Oil prices also clawed back early losses.
Troubles with Astra-Zenecas coronavirus vaccine trial and simmering China-U.S. tensions were among the factors spooking investors.
The pharmaceutical company said it had halted the trial while assessing a single adverse reaction to its COVID-19 vaccine.
At a minimum, the optimism balloon floated by vaccine hopes has sprung a sizable leak,” Stephen Innes of AxiCorp. said in a commentary.
Some of the weakness in technology shares carried over into Asian trading.
Tokyos Nikkei 225 lost 1% to 23,032.54 and the Hang Seng in Hong Kong dropped 0.6% to 24,468.93. Australias S&P/ASX 200 tumbled 2.2% to 5,878.60 and the Shanghai Composite index shed 1.9% to 3,254.63. South Koreas Kospi fell 1.1% to 2,375.81.
Among big losers in the technology sector were SoftBank Group Corp., which finished 2.9% lower. Alibaba Group Holding’s shares lost 2.4% in Hong Kong and semiconductor maker SMIC declined 2%.
Talk by President Donald Trump of decoupling the U.S. economy from China, as the presidential campaign heats up has been adding to uncertainty as Washington seeks to limit use of U.S. technology by Chinese companies, citing national security concerns.
The relationship between the worlds two largest economies has been on edge for years, and the antagonism threatens to further undermine global growth at a time when the coronavirus pandemic has pushed many countries into recession.
The growing likelihood that Democrats and Republicans in Washington will fail to find a deal to send more aid to unemployed workers before the November election is also dashing hopes for extra help for the U.S. economy.
Overnight, the S&P 500 fell 2.8% to 3,331.84, clinching its first three-day losing streak in nearly three months as Apple, Microsoft and Amazon all lost more than 4%, torpedoing broad market indexes. The Nasdaq composite, which is packed with tech stocks, dropped 4.1% and is down 10% since it set its last record high on Sept. 2.
The Dow Jones Industrial Average lost 2.2% to 27,500.89.
One factor behind the ups and downs has been stock options that enabled investors to make huge profits on some stocks without without having to pay for their full share prices. The recent buying frenzy began unwinding last week, sending prices tumbling.
Critics had been warning that big technology stocks had shot too high, even after accounting for their strong profit growth.
Analysts have characterized the abrupt about-face as a technical correction.
There is more talk of risk-off,’ but this still feels more like an unwinding of overbought positions, rather than a generalized flight to safety,” Robert Carnell of ING Economics said in a report. This is an orderly if substantial decline. There are still clearly buyers on the way down.”
The yield on the 10-year Treasury ticked up to 0.68% from 0.67% on Tuesday.
Benchmark U.S. crude recovered early losses, gaining 53 cents to $37.28 per barrel in electronic trading on the New York Mercantile Exchange. It had slumped $3.01 to $36.76 per barrel on Tuesday. Brent crude, the international standard, picked up 40 cents to $40.18 per barrel. It declined $2.23 overnight to $39.78.
In currency dealings, the U.S. dollar slipped to 105.99 Japanese yen from 106.05 yen. The euro slipped to $1.1772 from $1.1777.
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