US STOCKS-Slump in Tesla, Apple hits Wall St as tech rout deepens

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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
* Indexes off: Dow 1.96%, S&P 2.36%, Nasdaq 3.35%

(Updates to open)
By Medha Singh
Sept 8 (Reuters) - The Nasdaq plunged another 3% on Tuesday
as investors sold off shares of Tesla and other tech
heavyweights, while simmering U.S.-China tensions and concerns
over a rocky economic rebound also weighed on sentiment.
All eleven major S&P sectors fell in early trading, with
energy .SPNY and information technology .SPLRCT stocks
leading declines.
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.
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 — commonly known as the "FAANG" group of
stocks — fell between 1.9% and 4.8%.
Tesla Inc TSLA.O plunged 18.3% and was set for its worst
day in nearly six months 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 for 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 9:48 a.m. ET, the Dow Jones Industrial Average .DJI was
down 551.10 points, or 1.96%, at 27,582.21, the S&P 500 .SPX
was down 80.84 points, or 2.36%, at 3,346.12, and the Nasdaq
Composite .IXIC was down 378.78 points, or 3.35%, at
10,934.35.
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 7.3%.
General Motors Co GM.N jumped 4.9% 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 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. Declining issues outnumbered advancers for a 7.06-to-1 ratio
on the NYSE and a 5.31-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and two new lows,
while the Nasdaq recorded 10 new highs and 27 new lows.