Tech stocks bled heavily again for a third straight day as trading resumed on Wall Street following the Labor Day weekend. Tesla slumped a whopping 21 per cent to notch its worst day ever. The other major tech giants also dropped heavily as the Nasdaq fell 4 per cent and entered correction territory – down 10 per cent from its recent peak. Whilst this began as more of a technical correction within tech following the astonishing ramp in August than a broad risk-off move, it is nonetheless bleeding into the broader market and dragged down the majority of stocks. US benchmark yields have retreated and oil prices have rolled over. There was some rotation going on - Disney, Nike, McDonald's, Ford and GM rose – but the S&P 500 still declined almost 3 per cent and is not so far off correction territory itself. On the whole there is a sense that this sell off represents that sentiment had become too exuberant and needed to correct. We may expect the US market now to chop in W-pattern over the coming months and follow the path taken by European equities since June with the loss of momentum in the economic recovery and US election risks likely to become more visible in equity markets.
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