Markets start trading week lower, tech shares hurt Nasdaq

Residents walk past a Tesla store in Beijing China Monday Jan. 7 2019

Residents walk past a Tesla store in Beijing China Monday Jan. 7 2019

The closing figures prove to be the latest in the New York Stock Exchange's worst stock sell-offs in over five months amid the novel coronavirus pandemic, which initially sent American and foreign stocks plunging after COVID-19-containment measures imposed by various countries shuttered the global economy.

Tesla's valuation has arguably been stretched for much of 2020, and even after more than a 30% haircut in the last five trading days, shares trade at over 130 times earnings.

Energy shares slumped 3.71% as oil prices fell below $40 a barrel.

The electric-carmaker fell 21% in NY trading - the most ever - on news of a partnership between competitors Nikola Corp. and General Motors Co., deepening a sell-off that began last week after it was snubbed for inclusion in the S&P 500 index.

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Media reports of SoftBank's option purchases also reminded investors that market makers might have billions of dollars' worth of long positions as hedges against options trades. Instead of Elon Musk's Tesla, S&P Dow Jones Indices added online retailer Etsy, chip gear maker Teradyne and medical technology firm Catalent.

At session lows on Tuesday, Facebook, Amazon.com, Apple, Tesla, Microsoft, Alphabet and Netflix had collectively lost more than $1 trillion in market capitalization since September 2.

"However, we did talk a lot about how possible inclusion in the S&P 500 was a big driver of the stock's rally earlier in the year and therefore being snubbed will maybe force some funds to rethink whether they need to hold such a high beta stock if it's not part of the index". Declines started premarket and worsened as General Motors said it would take a $2 billion (Dh7.3bn) equity stake in Nikola and partner with the fledgling truck maker to engineer and manufacture its Badger pickup. The truck maker's shares surged more than 28.8%.

"This may have influenced its failure to make it into the S&P 500".

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