New York--"Bubble" talk returned to Wall Street this week with US stocks falling in part due to worries that biotech and other highflying stocks have risen to unjustifiable heights.
US stocks rallied on Friday, but it was not enough to offset losses the other four days. The Nasdaq Composite Index, which has outperformed the broader market in 2015, fell the most over the week, dropping 135.20 points (2.69 percent) to 4,891.22.
The Dow Jones Industrial Average fell 414.99 (2.29 percent) to 17,712.66, while the S&P 500 shed 47.04 (2.23 percent) to 2,061.02
Heading into the week, the Nasdaq stood above 5,000, rarified territory for an index that took 15 years to claw back near an all-time high set in 2000. But the tech-rich index found itself on the back foot most of the week.
Biotech companies like Celgene and Biogen came under pressure on worries that their promising new medications may fizzle, or take longer than expected to win regulatory approval. The Nasdaq biotech index lost 5.2 percent on the week. Semiconductor stocks were another weak segment in the index.
"The biggest story we saw was the mini-correction in biotechs and the mini-correction in semiconductors," said Art Hogan, chief market strategist of Wunderlich Securities.
Hogan said sentiment is "very cautious" ahead of the upcoming earnings season, with analysts having slashed estimates for many companies. Investors are also more focused on the liabilities than the merits of the stronger dollar and lower oil prices, he said.
Major economic data included news that US economic growth slowed to an annual rate of 2.2 percent in the fourth quarter, unchanged from a previous estimate, from 5.0 percent in third quarter. Despite stronger consumption, US growth was hit by a 10.1 percent increase in imports and a 7.3 percent fall in federal government spending.
Other data showed a slump in durable goods orders in February, but rising sales of new single-family homes and an increase in consumer prices during the month.
AFP
