The Nasdaq Composite tumbled nearly 5% and the Dow fell 700 points — or 2.6% — on Thursday
The S&P was down 3.4%.
Stocks tumbled just one day after hitting a record high. The Nasdaq had climbed above 12,000 points for the first time in history Wednesday.
So what's happening? Well for one, the Nasdaq has been outperforming the other two major stock indexes — the Dow and the S&P 500 — for months, so investors might just be taking making some adjustments after Wednesday's record highs. The Nasdaq remains up nearly 30% in 2020, far outpacing its counterparts.
But there are also technical reasons for Thursday's decline. As US-China relations sour, investors are moving money out of tech, which could get hit the hardest from a potential increase in tariffs.
The Big Tech companies such as Amazon, Google and Microsoft, all of which are part of the Nasdaq, have become the safe-haven investment of the summer. But investors have beginning to wonder when the rally will run out of steam, either because of increased regulation or because the economy as a whole picks up enough to void the need for safety picks altogether.