US STOCKS-Stocks end lower as tech swoon persists, Tesla in historic drop

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* Tesla posts its biggest one-day percentage drop
* GM jumps after taking stake in electric-truck maker Nikola
* Sell-off in Apple, other big tech stocks resumes

(Recasts with Nasdaq in correction territory, adds market
details after close)
By Chuck Mikolajczak
NEW YORK, Sept 8 (Reuters) - U.S. stocks closed lower for a
third straight session on Tuesday as heavyweight technology
names extended their sell-off to send the Nasdaq into correction
territory, while Tesla suffered its biggest daily percentage
drop after the stock was passed over for inclusion in the S&P
500.
Each of the 11 major S&P sectors were lower, led by declines
in technology .SPLRCT and energy .SPNY . Reports on Friday
that SoftBank 9984.T made significant option purchases during
the run-up in U.S. stocks added to investor nervousness.
Technology once again dragged indexes lower with a drop of
4.59%, the third straight decline and worst three-day
performance for the sector since mid-March. Even with the recent
drop, the sector remains the best performer on the year.
"Things got expensive, they ran up, they got very
concentrated and people got really giddy," said Willie Delwiche,
investment strategist at Baird in Milwaukee. "Everyone is all
loaded up on one side, it doesn't take much of a ripple to knock
some apples off the cart."
The Dow Jones Industrial Average .DJI fell 632.42 points,
or 2.25%, to 27,500.89, the S&P 500 .SPX lost 95.12 points, or
2.78%, to 3,331.84 and the Nasdaq Composite .IXIC dropped
465.44 points, or 4.11%, to 10,847.69.
Energy shares slumped 3.71% as oil prices fell below $40 a
barrel. 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.
Wall Street's rally, which has been fueled in large part by
massive amounts of monetary and fiscal stimulus, screeched to a
halt last week with the Nasdaq falling as much as 9.9% from its
intraday record as investors booked profits after a run that
lifted the index about 70% from its pandemic lows. Tuesday's
losses put the index down 10% from its closing record,
confirming a correction began on Sept. 2.
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 had collectively lost
more than $1 trillion in market capitalization since Sept. 2.
Tesla plunged 21.06% to suffer its biggest daily percentage
drop as the electric-car maker was excluded from a group of
companies being added to the S&P 500. Investors had widely
expected its inclusion after a blockbuster quarterly earnings
report in July. Up to Friday's close, the stock had surged about
400% this year.
JPMorgan Chase & Co JPM.N fell 3.48%, after a report it
was probing employees who were allegedly involved in the misuse
of funds intended for COVID-19 relief. The wider banks index
.SPXBK lost 3.44%, also tracking Treasury yields. US/
A gauge of value stocks .IVX fell 1.84%, but outperformed
the broader market and a 3.38%, decline in the growth index
.IGX . Wall Street's fear gauge .VIX climbed for the third
time in four sessions.
Concerns over potential U.S. sanctions against China's
biggest chipmaker, SMIC 0981.HK , hit domestic suppliers, with
the PHLX semiconductor index .SOX down 3.43%.
General Motors Co GM.N jumped 7.93% 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 40.79%.
Declining issues outnumbered advancing ones on the NYSE by a
3.78-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 2 new lows; the
Nasdaq Composite recorded 31 new highs and 49 new lows.
Volume on U.S. exchanges was 10.48 billion shares, compared
with the 9.32 billion average for the full session over the last
20 trading days.