Tech Meltdown Drags Wall Street Lower: Live Updates

Stocks on Wall Street fell Tuesday for a third-straight session, led by another sharp sell-off in shares of the same giant tech companies that had led the market back into record territory last month.

The Nasdaq composite tumbled more than 4 percent, in the latest of a series of declines for technology stocks that began last week as investors abruptly began to recalibrate their appetite for the previously high-flying shares. The S&P 500 fell about 2.8 percent.

The trigger for the sell-off remains at issue. Late last week the Financial Times reported that SoftBank, a Japanese conglomerate that has a history of making outsize bets, had been a large buyer of options linked to the rising tech stocks, helping supercharge both the tech sector, and the broader stock market, in August. SoftBank declined to comment to The New York Times.

But the idea that a single large buyer could have accounted for the recent momentum of giant tech stocks — Apple alone was up more than 20 percent last month — fed the worry among some investors and analysts that the tech rally had gone too far too fast.

“We’ve seen these incredible run-ups,” said JJ Kinahan, chief market strategist at TD Ameritrade. “People are starting to question their valuation.”

On Tuesday, Apple fell more than 6 percent, and Microsoft dropped more than 5 percent. Amazon, Facebook and Google’s parent, Alphabet, were also sharply lower.

Those companies have become crucial bellwethers of the broader market this year. Since the coronavirus crisis hit in March, investors had flocked to buy their shares, convinced that their already dominant positions in the American economy would only grow stronger as lockdowns resulted in more work from home and less spending elsewhere.

As their market values surged, so did their influence over benchmarks like the S&P 500. At the end of last week, these five stocks accounted for some 24 percent of the index, according to Goldman Sachs analysts.

With Tuesday’s decline, the Nasdaq breached what market watchers call a correction — a decline of more than 10 percent from its last high. That’s an arbitrary threshold but is often taken as a signal that investors have turned more pessimistic about the markets.

Oil futures also fell sharply on Tuesday, reflecting concerns about supply of crude as the summer driving season in the United States ends and with the Organization of Petroleum Exporting Countries, which slashed oil production in May, now adding to output.

Shares of energy companies followed the price of crude lower, with Halliburton, Marathon Oil, and Diamondback Energy among the worst performers on the S&P 500.


Credit…Johannes Eisele/Agence France-Presse — Getty Images

Some JPMorgan Chase employees and customers misused federal coronavirus aid money, according to an internal memo reviewed by The New York Times.

The memo, which was sent by the bank’s operating committee on Tuesday, said that officials had found “instances of customers misusing Paycheck Protection Program loans, unemployment benefits and other government programs.”

The committee, a group of senior leaders that includes its chief executive, Jamie Dimon, as well as its chief risk officer and its general counsel, did not describe any specific misconduct by employees, but it said that, in general, some of the activities officials had identified could be illegal.

“We are doing all we can to identify those instances, and cooperate with law enforcement where appropriate,” they wrote.

Banks played a central role in distributing much of the $2.2 trillion in aid created by the federal government under the CARES Act to help Americans deal with the economic effects of the coronavirus. They were in charge of vetting businesses seeking aid money, and they also had a hand in distributing unemployment benefits that included an extra $600 a week in federal funds.

There was never a hope of keeping fraudsters away from the money entirely, and many lenders are scrutinizing customers’ activities. Some determined criminals created fake businesses to take advantage of the forgivable loans offered by the Paycheck Protection Program, while others got funds using stolen identities. JPMorgan, the country’s largest bank, handed out more than $29 billion in P.P.P. loans, the most by any lender.

It is not clear how widespread the misconduct among JPMorgan’s employees and customers had been or how it compared with other banks.

“We distributed the note to reiterate our high standards,” said a JPMorgan spokeswoman, Patricia Wexler.

News of the memo was reported earlier by…

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Tech Meltdown Drags Wall Street Lower: Live Updates

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