Wall Street Falls at Open as Valuation Concerns Resurface; Dow Down 230 Pts

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Investing.com — U.S. stock markets fell sharply at the opening on Thursday, after an unexpected rise in weekly jobless claims sparked fears that trades anticipating an economic recovery in the course of the year may have gone too far, too fast. 

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was down 231 points, or 0.7%, at 31,382 points. The S&P 500 was likewise down 0.7% and the Nasdaq Composite was down 1.0%.

Earlier, the Labor Department had said initial jobless claims rose to 861,000 last week, instead of falling to 765,000 as expected. The news blunted the optimism that had been prompted by a strong retail sales report for January, which had been released on Wednesday. The figures suggested that the sharp rise in consumer spending enabled by stimulus checks was masking a much more severe weakness in the labor market, a point made repeatedly by Federal Reserve officials in recent weeks. 

Early trade was also overshadowed by a weaker-than-expected report from Walmart (NYSE:WMT). The big-box retailer’s stock fell 6.1% after the company said sales will hardly grow in the next 12 months, after posting a solid 8% rise in the 12 months through January.

Tesla (NASDAQ:TSLA) stock and Apple (NASDAQ:AAPL) stock, both favorites of tech investors in recent years, also slipped by 1.7% and 1.0% respectively amid signs of rotation out of a sector that is richly priced and into names with less stretched valuations. Such rotations had appeared to gain an important endorsement earlier this week in Berkshire Hathaway (NYSE:BRKa)’s latest investment report, which showed that Warren Buffett’s firm had trimmed its exposure to Apple and redeployed some of the proceeds to Chevron (NYSE:CVX), Verizon Communications (NYSE:VZ) and insurance company Marsh & McLennan  (NYSE:MMC).

Chevron and other energy stocks gave up some of the gains they had posted in the wake of the spike in natural gas and oil prices that has been caused by the cold snap in Texas and other states.

Among other movers, Facebook (NASDAQ:FB) stock fell 2.0% after the company’s dispute with the Australian government over a new law that forces it to pay publishers for the news it carries took another twist. The social media giant blocked government information on the pandemic along with Australian media reports as it suspended the sharing of news, opening itself up to a fresh angle of criticism. 

One standout gainer was Twilio (NYSE:TWLO) stock. The cloud computing company stock rose 7.5% to a new all-time high after reporting better than expected earnings after the bell on Wednesday and upholding its forecast for 30% annual growth over the next four years. Before the results, the company – which still expects to be loss-making in the current quarter – was valued at over 30 times trailing 12 months sales.