Nasdaq loses more than 100 points as investors dump tech stocks

Investing.com -

Investing.com - U.S. stocks pared gains to close mostly lower, as a slump in tech stocks weighed on overall performance, while a surprise result from yesterday's UK general election had a muted effect on sentiment.

Investors ditched tech stocks in the late afternoon U.S. session, as the Nasdaq fell more than 2%, after Goldman Sachs released a report warning investors about the lofty valuation and low volatility of the top-five tech leaders, known as the FAAMG - for Facebook, Amazon , Apple, Microsoft and Alphabet.

"This outperformance, driven by secular growth and the death of the reflation narrative, has created positioning extremes, factor crowding and difficult-to-decipher risk narratives (e.g. FAAMG's realized volatility is now below that of Staples and Utilities." Goldman Sachs said in a note to clients.

However, the slump in tech stocks was offset by a rise in financials, mostly banks, spurred by investor optimism that the sector would advance, after parts of the post-crisis Dodd-Frank financial regulations were tapered on Thursday.

The US House of Representatives on Thursday, passed legislation to roll back parts of the Obama-era, post-crisis Dodd-Frank financial regulations.

Meanwhile, a surprise result in the UK general election, which saw UK Prime Minister Theresa May's Conservative party fail to secure enough seats to form a majority in Parliament drew a muted reaction from U.S. equities.

The Dow Jones Industrial Average closed higher at 21,271.697. The S&P 500 lost 0.08% while the Nasdaq Composite closed at 6207.92, down 1.8%

The 'Bulls and Bears' on Wall Street

The top Dow gainers for the session: Pfizer Inc (NYSE:PFE) up 3.2%, JPMorgan Chase & Co (NYSE:JPM) up 2.4%, while Chevron Corporation (NYSE:CVX) rose 2.3%.

Apple Inc (NASDAQ:AAPL) down 3.9%, Microsoft Corporation (NASDAQ:MSFT) down 2.3% and Intel Corporation (NASDAQ:INTC) down 2.1%, were among the worst Dow performers of the session.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.