Wall Street drops as tech stocks, Nike weigh

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 31, 2018. (Reuters pic)

NEW YORK: US stocks tumbled on Tuesday as a drop in heavyweights Facebook and Nike added to worries over trade negotiations between the United States and other major economies.

Nike dropped 2.1%, top drag on the Dow Jones Industrial Average, as calls for a boycott of the sportswear giant gained traction on social media after it chose Colin Kaepernick as a face for adverts marking the 30th anniversary of its “Just Do It” slogan.

Facebook fell 3% after brokerage MoffettNathanson downgraded the social media giant to “neutral” from “buy” citing revenue growth deceleration.

The S&P technology index fell 0.7%, on track to post its biggest loss since August 15.

“This has more to do with the fact that the markets have had a strong run in the past two to three weeks and it is normal for people to take a little bit of profits off the table,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

Investors are cautious as a fresh round of US tariffs on $200 billion worth of Chinese goods are expected to take effect after a public comment period ends on September 5.

Talks between Canada and the United States to renegotiate the North American Free Trade Agreement (Nafta) ended on a sour note on Friday, but officials set plans to resume their talks on Wednesday.

Despite the looming tariff threats and trade uncertainties, the major US indexes closed higher in August, with the Nasdaq posting its largest monthly gain since January.

However, traders are cautious about September.

“Some of the largest slips tend to take place during September. Although the economy is still quite strong and stocks are marking hew highs, this doesn’t mean some usual September volatility is out of the question,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

Nine of the 11 major S&P 500 sectors were lower, led by a 1.12% drop in the telecom sector.

Verizon fell 1.9% after Barclays downgraded the wireless carrier’s stock.

At 10.06am ET the Dow Jones Industrial Average was down 108.52 points, or 0.42%, at 25,856.30, the S&P 500 was down 8.61 points, or 0.30%, at 2,892.91 and the Nasdaq Composite was down 39.01 points, or 0.48%, at 8,070.53.

Advanced Micro Devices gained 5.2% and Qualcomm was up 1.8% after brokerages upgraded the chip stocks.

The energy sector gained 0.4% as oil prices rose after the evacuation of two Gulf of Mexico oil platforms ahead of the approach of Gordon, which is expected to come ashore as a hurricane.

Declining issues outnumbered advancers for a 1.79-to-1 ratio on the NYSE and a 1.92-to-1 ratio on the Nasdaq.

The S&P index recorded 35 new 52-week highs and six new lows, while the Nasdaq recorded 82 new highs and 27 new lows.