CORRECTED-US STOCKS-Tech rout deepens, Nasdaq set for worst two-day fall since March

(Corrects VIX index in paragraph 16 to "was last down about 2
points at 30.31" instead of "last down 93 points at 32.67.")
* VIX hits more than 11-week high
* August nonfarm payrolls rise less than expected
* Banks, airline stocks a bright spot
* Indexes down: Dow 0.16%, S&P 0.47%, Nasdaq 1.02%

By Sinéad Carew
NEW YORK, Sept 4 (Reuters) - The Nasdaq was on track for its
worst two-day fall since mid-March on Friday as investors dumped
heavyweight technology stocks, while concerns around a patchy
economic recovery also hit the S&P 500 and the blue-chip Dow.
The tech-heavy Nasdaq fell as much as 9.9% from its record
high reached on Wednesday and the S&P 500 dipped briefly below
its pre-crisis record, reached in February, although both
indexes were last trading above their session lows.
Mega-cap companies Apple Inc AAPL.O , Microsoft Inc
MSFT.O , Amazon.com Inc AMZN.O and Facebook Inc FB.O were
down between 0.3% and 4%.
While Thursday's sell-off already reflected investor fears
that valuations for Nasdaq high-flyers had overheated, the
worries were exacerbated on Friday by the Financial Times (FT)
and others reporting that options trading by Japan's Softbank
9984.T had inflated these stocks.
"We've started to see signs of weakness in the last few
days, notably yesterday. Then you get a headline like the FT
story. That really adds fuel to the fire on the downside," said
Jeffrey Kleintop, chief global investment strategist at Charles
Schwab in Boston.
Nasdaq had powered the stock market's stellar recovery from
the coronavirus-led crash, climbing as much as 82% from March
lows while the benchmark S&P 500 and Dow had surged about 60%
from their troughs. The last time the Nasdaq had a deeper
two-day plunge was around March 17.
Earlier on Friday, the Labor Department's closely watched
employment report showed the jobless rate improved to 8.4% from
10.2% in July, better than analysts had anticipated. Nonfarm
payrolls, however, increased less than expected last month.
Kleintop argued that the jobs news did little to help the
progress of stalled talks for a fresh coronavirus stimulus
package among sharply divided lawmakers in Washington.
"It wasn't wonderful enough to get the market excited enough
that we don't need any more stimulus. On the other hand it
wasn't weak enough to bring the two sides in Washington together
to extend that stimulus package," he said.
At 3:01 p.m. EDT, the Dow Jones Industrial Average .DJI
was down 45.69 points, or 0.16%, at 28,247.04, the S&P 500
.SPX lost 16.32 points, or 0.47%, to 3,438.74 and the Nasdaq
Composite .IXIC dropped 116.73 points, or 1.02%, to 11,341.37.
Technology .SPLRCT , communication services .SPLRCL and
consumer discretionary indexes .SPLRCD posted the steepest
percentage declines among the 11 major S&P sectors.
Value stocks, which have underperformed so far this year,
were outperforming on Friday with the S&P bank index .SPXBK up
1.7% and the S&P 1500 airlines index .SPCOMAIR up 1.6%. While
the bank index has fallen more than 30% so far this year the
airline index was down 42% year-to-date.
"There are segments of the cyclical trade that you might be
starting to see some rotation in to, but I don't think it's the
big picture value-growth trade reversal yet," said Jack
Janasiewicz, portfolio strategist at Natixis Investment
Managers.
Fund managers warned Thursday's declines may be a preview of
a rocky two months ahead as institutional investors return from
summer vacations and refocus on potential economic pitfalls.
The run-up to the Nov. 3 U.S. presidential election is also
expected to add to the volatility.
Wall Street's fear gauge .VIX , after hitting a more than
11-week high in late morning trading, was last down about 2
points at 30.31.
Broadcom Inc AVGO.O gained 4.3% after the Apple Inc
AAPL.O supplier forecast fourth-quarter revenue above
analysts' estimates. Declining issues outnumbered advancing ones on the NYSE by a
1.79-to-1 ratio; on Nasdaq, a 2.16-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 1 new low; the
Nasdaq Composite recorded 21 new highs and 87 new lows.

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