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US STOCKS-Wall St closes down on tech slide, rising jobless claims

Herbert Lash
·3 min read
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* Declines in big tech-related firms pressure Nasdaq, S&P500

* Walmart slides as tepid outlook overshadows upbeat Q4sales

* Facebook shares slip on news blackout move in Australia(Adds closing prices)

By Herbert Lash

NEW YORK, Feb 18 (Reuters) - Stocks on Wall Street closedlower on Thursday as investors shifted out of big technologynames, while an unexpected rise in weekly U.S. jobless claimspointed to a fragile recovery in the labor market.

Shares of Apple Inc, Tesla Inc andFacebook Inc weighed the most on both the benchmark S&P500 and the tech-heavy Nasdaq.

Facebook shares dropped 1.5% to $269.39 as Wall Streetassessed the wider ramifications of its move to block all newscontent in Australia.

The Dow Jones Industrial Average fell 119.68 points,or 0.38%, to 31,493.34, the S&P 500 lost 17.36 points, or0.44%, to 3,913.97 and the Nasdaq Composite dropped100.14 points, or 0.72%, to 13,865.36.

Volume on U.S. exchanges was 13.13 billion shares.

Strong earnings, progress in the vaccination rollout andhopes of a $1.9 trillion federal stimulus package helped U.S.stock indexes again hit record highs at the start of the week.

But the months-long rally suggests stocks now have highvaluations, said Jason Pride, chief investment officer forprivate wealth at Glenmede in Philadelphia.

"We are still in the cautiously bullish environment for themarket on the whole," Pride said, citing two reasons.

"We're going to get a vaccine-induced economic recovery,that's No. 1. The flip side of that story is the markets havelargely priced that in and driven themselves to over-valuedterritory. Markets are going to struggle with that," he said.

Concerns over a rising inflation outlook have pushedinvestors to book profits on stocks with high valuations in theS&P 500 technology and communications servicessectors, which have underpinned a 76% rise in the S&P500 since its March 2020 lows.

Peter Essele, head of portfolio management at CommonwealthFinancial Network in Boston, said there was a lot of irrationalexuberance built into stock prices heading into this year.

"We started to enter an environment where risk actuallybecame a factor once again and notably, inflationary risk," hesaid. "Now it's a question of whether the fundamentals are goingto match the level of prices that currently exist."

A Labor Department report showed initial claims for stateunemployment benefits rose to 861,000 last week from 848,000 theprior week, partly due to potential claims related to thetemporary closure of automobile plants due to a globalsemiconductor chip shortage.

Of the 11 major S&P 500 sectors, only utilitiesand consumer discretionary rose, while real estatebarely fell, off 0.02%.

Walmart Inc slid 6.5% to $137.66 after the world'slargest retailer missed quarterly profit estimates and predicteda low-single digit rise in fiscal 2022 net sales.

"We're getting mixed readings. Strong retail sales and thenlousy claims. We’re going to see that probably for the rest ofthis quarter," said Jack Ablin, chief investment officer atCresset Capital Management in Chicago.

"Even the Walmart story wasn't that bad on the surface;they're going to make more investments," Ablin said.

Walmart has invested heavily in online advertising andhealthcare businesses over the past year, using pandemic-ledsales momentum to diversify beyond brick-and-mortar retail.

Marriott International Inc rose 0.5% to $131.98after reporting a quarterly loss as the hotel chain's bookingsdeclined due to pandemic-induced travel restrictions.

Declining issues outnumbered advancing ones on the NYSE by a2.30-to-1 ratio; on Nasdaq, a 2.53-to-1 ratio favored decliners.

The S&P 500 posted 15 new 52-week highs and no new lows; theNasdaq Composite recorded 104 new highs and 17 new lows.

(Reporting by Herbert Lash; additional reporting by Devik Jainand Shreyashi Sanyal in Bengaluru; Editing by SaumyadebChakrabarty, Anil D'Silva and Dan Grebler)