Tech Stocks Spark Thursday's Late-Day Selloff

The S&P 500 declined 1.4% from just after 1 PM ET to the close Thursday. Below we highlight sector performance from those 1:10 highs to show which held up the best and which led the declines.

Technology and materials were down the most at 2.18%, as investors were quick to sell stocks that have seen monster gains in recent weeks. Consumer staples and health care declined the least as investors "fled to quality." Almost all sectors remain in overbought territory, so we wouldn't be surprised to see a continuation of the profit-taking in the short term.

Below we list the Russell 1,000 stocks with the biggest declines from their highs yesterday. RVBD, FSLR, DDS, FAST and WNR saw intraday declines of 8% or more Thursday. As shown in the list below, many of the stocks that sold off had made nice gains from the August 15th bottom to Wednesday's close.

Yesterday's declines have many investors scratching their heads as to what caused the sell-off. While cautious comments regarding Baidu.com (BIDU) and the tech sector as well as the hawkish comments from a member of the ECB are being attributed to the intraday declines, a look at some intraday stock charts suggests that either somebody went to sell more than they intended or they really needed to get out.

Two intraday charts that stood out to us were Apple (AAPL) and Research in Motion (RIMM). Both stocks sold off between 8-10% in a matter of minutes before bouncing back.

We looked to see whether any hedge funds or mutual funds were in the list of top shareholders for both companies. The table below highlights the nine hedge funds and mutual funds that have large holdings in both RIMM and AAPL. For example, Wellington is the largest holder (among hedge funds and mutual funds) of RIMM (3.93% of shares outstanding) and AAPL (2.28%).

Comments

[J]

While it could have been one big holder selling a huge position, there's also the distinct possibility that AAPL and RIMM were hit by cascading stop loss orders after they'd started falling. As they dropped more, even more stop loss orders kicked in, flooding the market with sell orders. This is especially probably with companies like these that have gotten so much press over the last couple of years that they're held by a huge number of investors, many of whom aren't so savvy.