More Drops in Big Tech Pull Stocks Lower; Bitcoin Drops 19%
Stocks were broadly lower in early trading Wednesday as the market's downturn entered into a third day. Meanwhile the price of Bitcoin and other cryptocurrencies dropped sharply.
The S&P 500 index was down 1.2% as of 10 a.m. Eastern. The Dow Jones Industrial Average was down 1.1% and the Nasdaq Composite fell 1.3%.
Technology companies were among the biggest decliners in morning trading. Apple, Facebook, Google and Amazon were all down 1% or more. Bank stocks were also taking a hit, with Goldman Sachs and Wells Fargo both down 2% or more.
Digital currencies were in freefall in early trading after China's banking association issued a warning over the risks associated with digital currencies. A statement posted on the industry association's website said all members should “resolutely refrain from conducting or participating in any business activities related to virtual currencies.”
Bitcoin's price was down 19% to just over $35,000, according to the crypto news site Coindesk, well below the recent high of over $63,000 it reached in mid-April. This comes after longtime Bitcoin advocate Tesla recently recently said it would no longer accept Bitcoin as payment for its cars, reversing its earlier position.
The selling was so intense that the web site of Coinbase, an online brokerage for digital currencies, was down in the morning and getting pricing on some currencies was difficult. Coinbase's stock dropped 8%, and is now down 36% from the peak it reached on April 16, just two days after its IPO.
Investors also continue to be focused on whether rising inflation will be temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.
The fear is that the Federal Reserve will have to dial back its extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy. For all the worries about inflation, however, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to be “transitory.”
Higher interest rates drag on most of the stock market, but they are particularly painful for stocks, especially technology shares, considered the most expensive and those bid up for profits expected far into the future.