US stocks fall sharply; Nasdaq tumbles 2.4%

US stocks fall sharply; Nasdaq tumbles 2.4%

The tech-rich Nasdaq Composite Index, which stood above 5,000 on Monday, plummeted 118.21 points (2.37 per cent) to 4,876.52. The Dow Jones Industrial Average sank 292.60 points (1.62 per cent) to 17,718.54, while the broad-based S&P 500 fell 30.45 points (1.46 per cent) to 2,061.05.

Analysts cited growing concerns that biotech shares in particular have risen to unjustifiably high levels behind clinical results for drugs that will not hit the market for many years. Biogen shed 4.7 per cent, while Celgene lost 4.2 per cent.

Further selling has been spurred by end-of-quarter profit-taking, said Peter Cardillo, chief market economist at Rockwell Global Capital.

Analysts also pointed to a 1.4 per cent drop in durable goods orders in February. Barclays cited the weak durable goods report in projecting US gross domestic product growth for the first quarter of just 1.2 per cent.

Technology stocks with big declines included Apple (-2.6 per cent), Microsoft (-3.4 per cent) and Google (-2.0 per cent). Netflix and Twitter both lost 3.8 per cent and Tesla Motors shed 3.7 per cent. Chipmakers also were weak, with Texas Instruments dropping 4.6 per cent and Micron Technology losing 5.0 per cent.

Kraft Foods surged 35.6 per cent to US$83.17 after HJ Heinz’s owners 3G Capital and Warren Buffett’s Berkshire Hathaway agreed to pay about US$10 billion in a special dividend of US$16.50 per share to Kraft shareholders in a proposed merger deal to create the world’s third-largest food company. The special dividend represented a 27 per cent premium to Kraft’s closing price on Tuesday.

Petroleum-linked stocks were lifted by higher oil prices. Dow member Chevron gained 1.4 per cent, Nabors Industries rose 2.6 per cent and Anadarko Petroleum added 1.1 per cent.

Bond prices fell. The yield on the 10-year US Treasury rose to 1.93 per cent from 1.87 per cent on Tuesday, while the 30-year advanced to 2.51 per cent from 2.46 per cent. Bond prices and yields move inversely.

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