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US STOCKS-Growth Worries, Chinese Tech Rout Set To Drag Wall St Lower

Top 5 Tech Stocks for Investors to Buy on July 9, 2021

Wall Street’s main indexes were set to open sharply lower on Thursday as the spread of the COVID-19 Delta variant cast doubts over economic recovery, while a rout in Chinese tech stocks appeared to have spilled over across markets.

Investors globally turned wary of risk. Equities fell and bond prices rallied on worries about Beijing’s crackdown on foreign-listed Chinese firms and a sustained global economic recovery.

Chinese ride-hailing giant Didi Global Inc, which has been at the center of a selloff after its app was taken down by Beijing, fell 5.6% in premarket trading.

Other U.S.-listed Chinese stocks fell, tracking steep losses in China and Hong Kong, with e-commerce giant Alibaba Group Holding Ltd sliding 2.7% and internet search engine Baidu Inc down 3.2%.

“What you saw with Didi this week really spooked investors because you have a concern now…that we don’t know what the regulatory proposals are going to look like,” said Thomas Hayes, chairman of Great Hill Capital LLC in New York.

“Until there’s clarity and the Chinese government moderates its stance, investors will dump holdings and ask questions later.”

Meanwhile, Atlanta Federal Reserve President Raphael Bostic warned on Wednesday that a spike in the highly infectious coronavirus variant could hamper a U.S. economic recovery.

Minutes of the central bank’s June meeting released on Wednesday showed the Fed officials felt a U.S. recovery had a long way to go and they may not be ready yet to move on tightening policy.

Indeed, the Labor department’s report showed weekly jobless claims unexpectedly rose to 373,000 for the week ended July 3. Economists polled by Reuters had forecast 350,000 applications for the latest week.

The CBOE Volatility index, also known as Wall Street’s fear gauge, jumped 3.1 points to its highest level in over two weeks.

Stocks that led much of Wall Street’s rally this year and those that stand to benefit the most from an economic rebound were under pressure.

Big banks Citigroup Inc, JP Morgan Chase & Co, Wells Fargo & Co, and Bank of America Corp lost between 2% and 2.6% tracking a fall in the 10-year Treasury yield to 1.25%.

Energy shares such as Exxon Mobil Corp, Devon Energy Corp, Schlumberger NV, Halliburton Co, and Occidental Petroleum Corp fell between 1.6% and 3.0%.

Technology stocks that are typically favored in a low-rate environment also slipped, with the FAANG group of shares dropping between 0.7% and 2%. They had sent the Nasdaq and S&P 500 to record highs on Wednesday.

At 8:51 a.m. ET, Dow e-minis were down 450 points, or 1.3%, S&P 500 e-minis were down 54.5 points, or 1.25%, and Nasdaq 100 e-minis were down 197.75 points, or 1.34%.