US STOCKS-Nasdaq slides as tech rout deepens, Tesla hits three-week low

* 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
* Indexes off: Dow 1.91%, S&P 2.06%, Nasdaq 2.53%

(Adds comments, details; updates prices)
By Medha Singh
Sept 8 (Reuters) - The Nasdaq tumbled on Tuesday as
investors dumped high-flying technology stocks, while Tesla
tracked its worst day in nearly six months after a surprise
exclusion from the S&P 500.
All eleven major S&P sectors fell in early trading, with
declines worsening after news on Friday that SoftBank 9984.T
made significant option purchases during the run-up in U.S.
stocks.
Financial .SPSY and information technology .SPLRCT
stocks were among the biggest decliners. O/R
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 for inflation rising above 2%.
"I'm not going to throw in the towel here and say the tech
run is over," said Dennis Dick, proprietary trader at Bright
Trading LLC in Las Vegas.
"It's still a healthy correction. We came a long way and
it's time to cool off a little bit."
Media reports of SoftBank's option purchases also reminded
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.
Wall Street's tech-and-stimulus-led rally halted last week
with the Nasdaq .IXIC falling as much as 9.9% from its record
closing high - hit just five days ago - as investors booked
profits after a run that boosted the index about 70% from its
pandemic-lows.
At session lows on Tuesday, Facebook FB.O , Amazon.com
AMZN.O , Apple AAPL.O , Tesla TSLA.O , Microsoft MSFT.O ,
Alphabet GOOGL.O and Netflix NFLX.O - together known as
"FAATMAN" - collectively lost more than $1 trillion in market
capitalization since Sept. 2.
Tesla plunged another 15.1% to a three-week low after the
electric-car maker was excluded from a group of companies being
added to the S&P 500.
At 10:49 a.m. ET, the Dow Jones Industrial Average .DJI
was down 536.63 points, or 1.91%, at 27,596.68, the S&P 500
.SPX was down 70.76 points, or 2.06%, at 3,356.20, and the
Nasdaq Composite .IXIC was down 286.42 points, or 2.53%, at
11,026.72.
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 6.6% and 7.8%.
General Motors Co GM.N jumped 7.9% 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 37.3%.
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. Declining issues outnumbered advancers more than 4-to-1 on
the NYSE and 2-to-1 on the Nasdaq.
The S&P index recorded no new 52-week high and two new lows,
while the Nasdaq recorded 20 new highs and 37 new lows.