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June 2012
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Investors flee stocks, pummelling Nasdaq

BY MATTHEW CRAFT Associated Press

NEW YORK - The high-flyers are laying the stock market low - once again.

Investors turned against biotech, Internet and other once-soaring stocks on Thursday, driving the Nasdaq composite index to its worst day since 2011.

The sell-off in tech names dragged down the broader market and left all the major U.S. indexes in the red for the year.

Steep declines in tech, followed by rebounds, have become a familiar pattern in the stock market in recent weeks.

After falling Monday, the Nasdaq and other major index rallied over the next two days. On Thursday, stocks dropped again, led once more by biotech and technology companies.

The slide represents a shift in investor psychology. After chasing their huge gains in 2013, investors are worried that stocks like Facebook and Gilead Sciences, which doubled last year, have become too expensive.

And it's not just lofty prices that have made those sectors volatile in recent weeks. Regulators are scrutinizing the cost of cutting-edge biotech drugs. Worried investors are shifting from riskier investments to safer areas like utilities, health care and consumer staples.

On Thursday, the Nasdaq composite index fell 3 percent, its worst drop since November 2011.

Few companies escaped the downdraft. Of the Nasdaq's 100 largest stocks, only one, C.H. Robinson Worldwide, a freight company, ended higher.

Several factors likely combined to send stocks lower, said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.

Frederick said that recent IPOs, many of them tech and biotech companies, have become overheated. At the same time, the market hasn't had a 10 percent decline since the spring of 2012, only smaller dips in the 4 percent and 5 percent range.

"We've been due," Frederick said.

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