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Nasdaq ends wild day flat after Big Tech reversal, Dow drops 470 points for worst day since February

It was one of the wildest days of the year for the U.S. stock market with technology shares as the battleground. Big Tech took a big hit to start the day on concerns about rising inflation and high valuations. The selling eventually spread to the rest of the market as the day went on.

But in an odd twist, tech shares rebounded in the afternoon as investors went back into names like Amazon and Netflix and left the rest of the market in the red.

The tech-heavy Nasdaq Composite eventually ended the roller-coaster session down less than 0.1% at 13,389.43 after shedding 2.2% at its low of the day.

The Dow Jones Industrial Average dropped 473.66 points, or 1.4%, to 34,269.16 for its worst day since February 26. Travelers Companies and Home Depot led the declines in the 30-stock Dow.

The S&P 500 slid 0.9% to 4,152.10 as 10 out of 11 sectors registered losses.

Earlier in the volatile session, higher-priced technology shares led the market losses and the selling spilled over to everything from bank stocks to energy and industrials. Then many tech shares recouped most of the decline and closed in the green. Amazon and Netflix both rose more than 1%, while Facebook also reversed 0.2% higher. Apple and Alphabet also cut losses significantly. The growth-focused ARK Innovation ETF gained more than 2%, making back earlier steep losses.

The Cboe Volatility Index, a measure of fear in the markets derived by option prices on the S&P 500, jumped as high as 23.73, levels not seen in two months. The so-called VIX remained stubbornly above 20 for most of last year before dropping to a low below 16 last month. A rising VIX is often accompanied by falling markets.

Some traders said so-called short covering contributed to the intraday comeback in tech. When shares sell off sharply, short-sellers betting against the names have to buy back borrowed securities in order to close out the short position and cash out.

Reference: CNBC