Dow loses more than 500 points Thursday as stocks take a tumble

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U.S. stocks tumbled on Thursday, reversing early gains as investors continued to rotate away from high-priced mega-cap growth stocks and second-quarter earnings season gathered steam. All three major U.S. stock indexes suffered steep losses, and the blue-chip Dow fell the most, halting a series of consecutive record closing highs. The sell-off resumed a day after the Nasdaq posted its biggest one-day drop since December 2022, and the chip sector suffered its largest daily percentage plunge since the pandemic-related shutdown panic of March 2020. Anxiety remained elevated. The CBOE Market Volatility index, often called the "fear index," touched its highest level since early May. "What's different from yesterday is you did see money going into other sectors ... but today it’s a pretty broad selloff," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. The Russell 2000 fell for the second day in a row after an apparent rotation into smallcaps sent the index soaring 11.5% in its most robust five-day gain since April 2020. A Wall Street sign is pictured outside the New York Stock Exchange amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., April 16, 2021. Stock market swoons: 'It's been a great run' "Over the last two weeks we've seen a rotation into other sectors including mid-caps and small-caps, which have been huge laggards," Ghriskey added. "But today it’s reversing. The market is flailing around trying to find a direction." "Investors (are) just pulling back and saying, 'We're going to cash out now, it's been a great run.' They’re unsure what’s going to happen in terms of politics," Ghriskey said. In economic news, initial jobless claims data landed above analysts' estimates, providing further evidence that the labor market is softening. This is a necessary step toward putting inflation on a sustainable downward path, according to the Federal Reserve. The Dow Jones Industrial Average fell 533.06 points, or 1.29%, to 40,665.02, the S&P 500 lost 43.68 points, or 0.78%, to 5,544.59 and the Nasdaq Composite dropped 125.70 points, or 0.7%, to 17,871.22. Of the 11 major sectors in the S&P 500, healthcare stocks suffered the largest percentage decline, while energy stocks were the sole gainers. Second-quarter earnings season gained momentum, with 60 of the companies in the S&P 500 having reported. Of those, 85% have delivered consensus-beating results, LSEG data showed. Analysts now see aggregate year-on-year S&P 500 earnings growth of 11.1%. Among individual stocks, Domino's Pizza tumbled after falling short of estimates for quarterly same-store sales. Story continues Shares of Homebuilder D.R. Horton rose after the company beat profit estimates and delivered more new homes than expected, but tightened its annual forecast. Its shares jumped 10.1%. The move also lifted the Philadelphia SE Housing index to a record high. Warner Bros Discovery jumped following a report that the company had discussed a plan to split its digital streaming and studio businesses from its legacy TV networks. Streaming pioneer Netflix lost ground in extended trading after posting quarterly results. This article originally appeared on USA TODAY: Dow down more than 500 points: Stock market takes a tumble