Wall Street's main indexes fell on Thursday, with the Nasdaq slipping about 2.5%, as technology-related stocks remained under pressure following a rise in U.S. bond yields.
The benchmark 10-year Treasury yields hit a one-year high of 1.48%, prompting investors to lock in profits on some high-flying growth stocks due to concerns over heightened valuations.
The Treasury note yield also rose above S&P 500 dividend yield, wiping out a historically strong advantage that the stock market yield has held.
Apple Inc, Amazon.com Inc, Microsoft Corp, Alphabet Inc, Facebook Inc and Netflix Inc were down between 1.18% and 1.46%.
"The higher the yield on bonds, the more we see this push to move out of stocks," said Jeffrey Carbone, managing partner at Cornerstone Wealth, in Huntersville, North Carolina.
"The market is starting to get a bit frothy, so investors are taking some gains off the growth areas of stocks, which had the biggest movements and moving it to more conservative areas for higher yields in the bond market."
The S&P 500 technology sector and communication services were down 2.16% and 1.40%, respectively.
The S&P 500 growth index has risen 2.3% in February, sharply underperforming the value index, which has gained 9% on optimism related to a post-pandemic reopening of the economy.
Meanwhile, data showed fewer Americans filed new claims for unemployment benefits last week amid falling COVID-19 infections, but the near-term outlook still remained unclear after winter storms wreaked havoc in the South region in the middle of this month.
Optimism about more U.S. stimulus and a quicker pace of vaccinations at the beginning of the month have positioned the S&P 500 and the Dow Jones indexes for their best monthly gain since November.
However, the lack of significant new developments around the fiscal package and the winding down of the earnings season have caused uncertainty in the market.
"In the beginning of February, the stimulus news was the driving force but now that it has been priced in, there is nothing on the distant horizon for equity investors to be excited about and there is a concern that upside is limited," said Mike Zigmont, head of trading and research at Harvest Volatility Management.
At 12:27 p.m. ET, the Dow Jones Industrial Average was down 341.74 points, or 1.07%, at 31,620.12, the S&P 500 was down 61.80 points, or 1.57%, at 3,863.63 and the Nasdaq Composite was down 328.82 points, or 2.42%, at 13,269.15.
Tesla Inc fell 5.04% after a media report that the electric-car maker told workers it would temporarily halt some production at its car assembly plant in California.
Best Buy Co Inc slid 9.66% on a weak full-year forecast after missing estimates for holiday-quarter comparable sales.
Moderna Inc jumped 5.37% after the drugmaker said it was expecting to post $18.4 billion in sales from its COVID-19 vaccine this year.
Declining issues outnumbered advancers for a 3.57-to-1 ratio on the NYSE and a 3.77-to-1 ratio on the Nasdaq.
The S&P index recorded 70 new 52-week highs and no new low, while the Nasdaq recorded 190 new highs and eight new lows.