The S&P 500 closed lower Monday, as investors continued to abandon tech at a time when rates continue to climb and inflation is expected to remain elevated.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average slipped 0.9% or 323 points, the Nasdaq was down 2.1%.
Facebook (NASDAQ:FB), down 5%, led the slump in tech after a Facebook whistle-blower named Frances Haugen alleged that the social media company prioritizes profit over the well-being of its users.
The news brought the regulatory spotlight back onto the social media companies, with Twitter (NYSE:TWTR) and Snap (NYSE:SNAP) falling more than 5%.
The selloff in tech was exacerbated by a further malaise in sentiment on growth stocks as investors price in higher rates and inflation.
Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOGL) fell more than 2%.
Growth stocks like tech, with high valuations, tend to cash flow that extend further out into the future, which is unattractive in an inflationary environment.
Health care also contributed to the sea of red on Wall Street, led by Moderna (NASDAQ:MRNA) as investors continued to ditch the stock following positive news of Merck’s late-stage trial for their new anti-viral pill.
Energy stocks bucked the trend, underpinned by rising oil prices after OPEC+ decided to stick with an existing agreement to hike oil output by 400,000 barrels per day in November.
Sentiment on Wall Street was also soured by ongoing uncertainty in Washington on several fronts including the need to raise the debt ceiling before the Oct. 18, to avoid the U.S. defaulting on its debt.
In other news, auto stocks rose, with Tesla and General Motors in the ascendency.
General Motors (NYSE:GM) climbed 1.6% after Engine No. 1, an activist hedge fund, said it had bought a stake in the company, citing optimism over the its electric vehicle expansion plans.
Tesla (NASDAQ:TSLA), meanwhile, was up 0.8% after reporting that vehicles in Q3 swelled to a record high despite the ongoing chip-supply shortage that is weighing on the activity in the industry.
"We note the company's supply change management and flexible operating system appear to be serving the company well as demand continues to outstrip supply," Oppenheimer said in a note.