* Major indexes all in red
* CVS Health gains after raising 2021 profit view
May 4 (Reuters) - The Nasdaq ended sharply lower on Tuesday
as investors dumped megacap growth stocks to seek shelter in
more defensive parts of the market, amid concerns on rising
interest rate and uncertainty over an upcoming jobs report.
Highly valued technology-related companies including
Microsoft Corp, Alphabet Inc, Apple Inc
, Amazon.com Inc and Facebook Inc sold
off across the board. The Philadelphia Semiconductor Index
Comments by Treasury Secretary Janet Yellen on the potential
need for interest rate hikes further exacerbated the tech
selloff, as investors worry higher rates would weigh on
valuations of growth companies.
"It may be that interest rates will have to rise somewhat to
make sure that our economy doesn't overheat, even though the
additional spending is relatively small relative to the size of
the economy," she said in taped comments at a virtual event by
Seven out of the 11 major S&P 500 sectors fell, with
technology, communication services and
consumer discretionary falling the most.
"Wall Street wont find out if the Fed is making a policy
mistake until several months down the road and that is making
some traders nervous," Edward Moya, senior market analyst at
Oanda wrote in a note.
"After Fridays nonfarm payroll report, investors will see a
clear path for the U.S. economy to recover the remaining lost
jobs due to COVID and noticeably hear more companies talk about
Unofficially, the Dow Jones Industrial Average rose
22.11 points, or 0.06%, to 34,135.34, the S&P 500 lost
27.61 points, or 0.66%, to 4,165.05 and the Nasdaq Composite
dropped 261.62 points, or 1.88%, to 13,633.50.
"When we have pauses or pullbacks, people tend to move out
of growth stocks into more defensive names," said Randy
Frederick, vice president of trading and derivatives for Charles
Schwab in Austin, Texas.
Fiscal stimulus, rapid vaccinations and the Federal
Reserve's accommodative stance have spurred a strong rebound in
the U.S. economy and pushed Wall Street to record highs this
year. The so-called "pandemic winners," however, have recently
started to fall out of favor.
Among other stocks, CVS Health Corp gained after
reporting a first-quarter profit above analysts' estimates and
raising its 2021 forecast.
Gartner, rose after delivering better-than-expected
Results in this earnings season so far have been largely
upbeat. Average profits at S&P 500 companies are expected to
have risen 47.7% in the quarter, compared with forecasts of a
24% growth at the start of April, according to IBES data from
Investors are also awaiting data through the week, including
the Labor Department's monthly non-farm payrolls due on Friday.
The report is expected to show a rise in job additions in April.
(Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru,
Krystal Hu in New York; Editing by Saumyadeb Chakrabarty and