US STOCKS-Nasdaq rebounds as tech stocks stabilize after rout

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* Tiffany drops as LVMH warns it is set to walk away from
takeover
* Tesla climbs after losing a third of its value in 10 days
* Tech stocks lead gains among Dow 30 components
* Indexes up: Dow 1.49%, S&P 1.69%, Nasdaq 1.97%

(Updates to market open)
By Medha Singh and Devik Jain
Sept 9 (Reuters) - U.S. stocks bounced on Wednesday with the
Nasdaq gaining 1.5%, as a rout in technology shares halted and
investors shrugged off news that AstraZeneca had paused global
trials of its experimental coronavirus vaccine.
Tesla Inc's TSLA.O shares jumped 8.8% after shedding about
a fifth of their value in the previous session, following its
surprise exclusion from the S&P 500. Apple Inc AAPL.O , Salesforce.com Inc CRM.N and Microsoft
Corp MSFT.O , which have borne the brunt of the tech rout, were
among the top boosts to the blue-chip Dow.
Other "stay-at-home" winners such as Amazon.com Inc AMZN.O
and Facebook Inc FB.O also climbed, a day after their declines
pushed the tech-heavy Nasdaq into correction territory as it
ended 10% below its Sept. 2 closing high.
All major S&P sectors were higher on Wednesday led by a 2%
gain in technology .SPLRCT stocks.
The correction has partly been driven by worries that
sellers of call options would unwind massive amounts of stocks
that they bought during the run up in U.S. stocks as hedges.
Media reports said SoftBank Group Inc 9984.T has made big
bets on equity derivatives tied to tech firms, while retail
investors paid $40 billion of premium on call options in the
past month, data from derivatives clearing organization OCC
showed.
In signs of growing unease about the positioning in tech
stocks, a measure of demand for protective put options in
relation to call options, used to bet on upside, has risen
sharply. Market gyrations are expected to increase in the run-up to
Nov. 3 U.S. presidential elections, with September and October
also historically the most volatile two months of the year.
Still, analysts said they did not expect a prolonged
sell-off in U.S. stocks against the backdrop of an easy monetary
policy by the Federal Reserve.
"We will be seeing the correction in the tech stocks
continue for a little bit longer, but I don't think that we are
headed for a new bear market," said Sam Stovall, chief
investment strategist at CFRA in New York.
Later this week, the U.S. Senate also aims to vote on a
drastically scaled-back Republican coronavirus aid bill, despite
opposition from Democrats who are needed for any measure to be
enacted into law. At 10:04 a.m. ET, the Dow Jones Industrial Average .DJI
was up 410.39 points, or 1.49%, at 27,911.28, the S&P 500 .SPX
was up 56.44 points, or 1.69%, at 3,388.28, and the Nasdaq
Composite .IXIC was up 213.66 points, or 1.97%, at 11,061.35.
Wall Street's fear gauge .VIX slipped further away from
near three-month highs, as stock markets also shrugged off news
about AstraZeneca AZN.L pausing global trials of its
experimental COVID-19 vaccine after an unexplained illness in a
participant. Lululemon Athletica Inc LULU.O dropped 7.2% after the
yogawear maker forecast a drop in current-quarter adjusted
profit due to higher marketing expenses. Tiffany & Co TIF.N tumbled 10.3% after French luxury goods
giant LVMH LVMH.PA warned it was set to walk away from its
planned $16 billion takeover of the U.S. jeweler due to
complications arising over the deal. Advancing issues outnumbered decliners more than 4-to-1 on
the NYSE and 3-to-1 on the Nasdaq.
The S&P index recorded one new 52-week high and one new low,
while the Nasdaq recorded 20 new highs and eight new lows.

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