Stocks tumbled on Thursday in a late sell-off led by shares of technology companies, ending two days of relative calm on Wall Street.
The S&P 500 fell 1.4 percent, while the Nasdaq composite slid 2.5 percent, losses that wiped out gains made by both benchmarks over the past two days.
Thursday’s trading echoed a wave of selling that hit markets last week, with large technology weighing on the broad market. Tesla, one of the biggest companies in the S&P 500, was one of the worst performers in the index, falling 6.8 percent. Microsoft fell 4.2 percent, Amazon dropped 2.4 percent, and Apple and Google slid about 2 percent.
The Nasdaq is down more than 5 percent this year, and the S&P 500 is down more than 2 percent, a decline that has come as investors adjust their expectations for interest rates in the year ahead as the Federal Reserve looks to get inflation under control and cuts its support for the economy.
The central bank is already slowing its bond-buying program, and it has signaled that it could soon raise interest rates and begin to shrink its asset holdings in a bid to further cool off the economy.
“We have a set of tools — they are very effective — and we will use them to bring inflation back down,” Lael Brainard, a Fed governor whom President Biden has nominated to become the central bank’s vice chair, said on Thursday at a Senate hearing. Economists expect the Fed to begin raising interest rates as soon as March.
Rising interest rates discourage risk-taking by investors, which tends to hit tech stocks more than others. What’s more, shares of many technology companies trade at high valuations because of fast growth and expectations that they will produce significant profits in the future. But higher interest rates put future growth in doubt and make those future earnings worth less to current investors.