US STOCKS-Nasdaq set to plunge at open as tech stocks get hammered

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* Tesla tumbles after not being included in S&P 500
* GM jumps after taking stake in electric-truck maker Nikola
* Sell-off in FAANG stocks resumes
* Fears over U.S. sanctions on SMIC pressure chip stocks
* Futures off: Dow 0.63%, S&P 1.30%, Nasdaq 3.16%

(Adds comment, details; Updates prices)
By Medha Singh
Sept 8 (Reuters) - The Nasdaq was set to open sharply lower
on Tuesday as investors sold off shares of Tesla and other tech
heavyweights after a long weekend, while simmering U.S.-China
tensions and concerns over a rocky economic rebound also weighed
on sentiment.
Wall Street's tech-fueled rally halted last week with the
Nasdaq .IXIC closing 6% below its record closing high.
Investors booked profits, taking advantage of a stimulus-fueled
rally that lifted the index about 70% from its pandemic-induced
low in March.
The Nasdaq closed on Friday with its biggest weekly decline
since the height of the sell-off in March, with shares of
Facebook Inc FB.O , Amazon.com Inc AMZN.O , Apple Inc
AAPL.O , Netflix Inc NFLX.O and Google-parent Alphabet Inc
GOOGL.O sliding between 1.4% and 3.7%.
The group — commonly known as "FAANG" stocks — have been
largely responsible for the rebound on Wall Street even as data
points to a faltering recovery for the domestic economy. The
companies were down between 2.7% and 5.9% in premarket trading.
Tesla Inc TSLA.O plunged 15.1% after the electric-car
maker was excluded from a group of companies being added to the
S&P 500. Still, market participants said they did not expect a
prolonged sell-off against the backdrop of an accommodative
monetary policy by the Federal Reserve, which last week
indicated a higher toleration of inflation rising above 2%.
"I don't think the market will correct in a big way," Peter
Cardillo, chief market economist at Spartan Capital in New York,
told the Reuters Global Markets Forum.
"That is because the powerhouse of this rally is the Fed
(and) there is essentially no place to put your money except
stocks."
Media reports said SoftBank 9984.T made significant option
purchases during the run-up in U.S. stocks, reminding investors
that market makers might have billions of dollars worth of long
positions as hedges against options trades, which will have to
be sold as prices fall. "If you bought a lot of call options in the second quarter,
you're doing very well, but that creates a problem for later
when you need to unwind these positions," said Ken Peng, Citi
Private Bank's head of Asia Investment Strategy.
Peng added that the six largest U.S. technology stocks now
comprise 15% of the global market capitalization, all but
squeezing shorts out completely.
At 8:35 a.m. ET, Nasdaq 100 e-minis NQcv1 were down 365.5
points, or 3.16%, Dow e-minis 1YMcv1 were down 178 points, or
0.63%, and S&P 500 e-minis EScv1 were down 44.5 points, or
1.30%.
Fears over potential U.S. sanctions against China's biggest
chipmaker SMIC 0981.HK hit domestic suppliers, with Applied
Materials Inc AMAT.O , Lam Research Corp LRCX.O and KLA Corp
KLAC.O dropping between 6.1% and 6.4%.
General Motors Co GM.N jumped 6.2% after it acquired an
11% stake, worth $2 billion, in U.S. electric-truck maker Nikola
Corp NKLA.O . The truck maker's shares surged more than 28.8%.
U.S. President Donald Trump and Democratic rival Joe Biden
are set to visit battleground states this week as some opinion
polls show the race tightening with less than 60 days to go
until the Nov. 3 election.