Stocks took a steep and sudden dive on Thursday, with the Dow Jones Industrial Average falling by more than 700 points mid-morning. The S&P 500 index tumbled by 3.5 percent and the Nasdaq composite index plunged by more than 5 percent.
The tech sector, which has spearheaded much of the market’s meteoric rise since the pandemic began, led Thursday’s slide. Apple marked its worst day since March, with shares down by more than 5 percent. Amazon, Salesforce and Microsoft all saw declines in the 3-5 percent range.
Facebook fell by 5.2 percent after an announcement that it would ban all new political ads from its platform for the week leading up to Election Day, Nov. 3, and remove posts that try to suppress or discourage voting.
Thursday’s sell-off comes on the heels of record highs for the Nasdaq and the S&P, with the latter clocking more than 20 record closing highs so far this year. Two big stock splits took effect on Monday: Apple’s 4-for-1 and Tesla’s 5-for-1 split. Both companies saw shares rise sharply, with Apple advancing by 4 percent and Tesla jumping by close to 10 percent.
Market watchers were parsing a variety of economic metrics, including Thursday’s weekly jobless claims data, which beat analysts’ expectations, revealing that 881,000 people filed for first-time unemployment benefits during the last week of August. While this number is the lowest weekly total since the pandemic, it is still four times the pre-pandemic figure. Continuing claims indicate that 13.3 million people are still filing for ongoing benefits.
Data from the Commerce Department also showed that the U.S. trade deficit soared in July to $63.6 billion, the highest level in 12 years. On Wednesday, the Congressional Budget Office said federal debt is expected to outpace the country’s gross domestic product by the end of 2021.
Investors are now turning their focus to Friday’s all-important monthly jobs report, released by the Bureau of Labor Statistics. Economists predict that the national unemployment rate will fall into the single digits for the first time since February, declining from 10.2 percent to around 9.8 percent. Before the pandemic hit, that rate was at 3.5 percent, the lowest in five decades.
In the meantime, House Democrats remain at loggerheads with the White House over the next stimulus aid plan, with no clear indication another package will pass before the Nov. 3 election. While Treasury Secretary Steven Mnuchin indicated in testimony on Monday that he is he is “willing to sit down at the negotiating table,” House Speaker Nancy Pelosi said on Tuesday that there are still “serious differences.”