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Dow Falls as Stimulus Stalemate Triggers Selloff; Tech Turns Ugly

By Yasin Ebrahim

Investing.com – Wall Street fell Thursday, as the rebound in tech ran out of steam, while signs of a slowdown in the labor market raised concerns about the strength of the recovery at a time when the Republican stimulus package failed to win enough votes in the Senate to proceed. 

The Dow Jones Industrial Average fell 1.33%, or 370 points. The S&P 500 was down 1.64%, while the Nasdaq Composite traded fell 2%.

Tech struggled to hold onto its momentum from a strong rebound a day earlier, with Apple (NASDAQ:AAPL) paring gains to trade more than 3% lower as investors seemingly take profit on the stock ahead of the new iPhone launch expected next month.

The other four stocks that make up the Fab 5 turned negative, with Facebook (NASDAQ:FB) Alphabet (NASDAQ:GOOGL) Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) down more 1%.

Zscaler (NASDAQ:ZS) also fell into the red after rising in early trade after the cloud cybersecurity company posted results that topped estimates on both the top and bottom lines.

Energy led the pace move lower, falling 3% as oil prices slipped after U.S. crude inventories unexpectedly rose last week, renewing worries about the strength of demand.

Investor sentiment was also hurt by worries about consumer spending as U.S. lawmakers failed to find a way to break the deadlock on stimulus talks at a time when job growth appears to be slowing.

The Republican coronavirus stimulus plan failed to get the votes needed to advance in the Senate, CNBC reported.   

The Labor Department said the number of first-time filers for unemployment benefits came in at 884,000 for the week ended Aug. 29, missing economists' forecast for a fall to 850,000.

"Alongside the stalling in initial claims for regular state unemployment benefits, claims for Pandemic Unemployment Assistance rose by a hefty 91K, the fourth straight increase, so total initial claims increased," Pantheon Macroeconomic said.

Elsewhere, airlines sidestepped the weakness on hopes that the aviation industry is set to receive more federal aid. Senate Republican John Cornyn on Wednesday pledged to push Congress to include more fiscal support in the stimulus bill.

American Airlines (NASDAQ:AAL) and Delta Air Lines (NYSE:DAL) were flat, while0 United Airlines (NASDAQ:UAL) climbed 1%.

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