The Nasdaq Composite entered bear market territory Thursday as Wall Street sold off pricey technology stocks amid steep valuations, increased regulatory concerns and fears of slowing economic growth.
The index fell more than 2 percent on Thursday at one point, bringing it down more than 20 percent from its record reached at the end of August. As of 1:25 p.m. ET, the Nasdaq was 19.7 percent from its highs.
Amazon, Apple, Netflix, Alphabet, which drove the gains in the Nasdaq during the bull market, were all lower on Thursday. Facebook was the one member of 'FAANG' spared on Thursday and was trading slightly higher. Those names, including Facebook, are all already in bear market territory individually, down more than 20 percent from highs.
Apple is down 32 percent from its latest high. Amazon is off by 29 percent from its record. At their peaks, both were worth more than $1 trillion in market value.
"It's been a bear market for a little while now, whether it's been reflected in Russell 2000 or the Nasdaq," said Steven DeSanctis, a Jefferies equity strategist. "We've seen sectors like energy, financials and some consumer names that have been absolutely beaten up. It's pretty broad-based."
Investors were quick to abandon the tech household names in part thanks to how expensive technology stocks had become over the past year. Traders bought up such stocks throughout 2017 and into 2018 amid a swell in demand for chips and an acceleration in revenues at Facebook and Amazon that promised companies some of the best advertising exposure available.
But an uptick in borrowing costs and heightened regulatory scrutiny has trimmed the buoyant income outlook for the sector, which often borrows cash to fuel innovation or content purchasing. Facebook stock, for instance, fell more than 30 percent over the past six months as a string of data privacy reports and subsequent federal hearings threw the social media giant into the limelight.
"People are really worried about 2019 outlook and what earnings numbers are going to be," DeSanctis added. "Earnings numbers are coming down for 2019. Companies are able to manage around higher interest rates, which slow down their business, but the tariffs add an additional cost. So companies are really going to take a step back and not spend a lot of money initially in 2019."
Apple also faced revenue concerns this quarter after it told investors that it will no longer disclose iPhone unit sales when it reports financial results, raising fears that sales of the iconic smart phone may have peaked. Many analysts and shareholders, who had used the quarterly phone sales figures as a quick gauge of the company's income health, said they were disappointed with Apple's choice to withhold the information.
Chipmakers saw their equity soar in 2017 as retail investors flocked to cryptocurrency investments and developments in artificial intelligence, machine learning and autonomous driving promised long-lasting demand for semiconductors and equipment.
Stock of Nvidia and Advanced Micro Devices are both off more than 40 percent from their own 52-week highs and were lower on Thursday.
—CNBC's Yun Li contributed reporting.
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