US STOCKS-Stocks fall as tech remains under pressure, Tesla tumbles

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* Tesla tumbles after exclusion from S&P 500
* GM jumps after taking stake in electric-truck maker Nikola
* Sell-off in Amazon, Apple, other big tech stocks resumes
* Dow down 1.45%, S&P 500 down 1.93%, Nasdaq down 2.92%

(Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Sept 8 (Reuters) - U.S. stocks dropped for a third
straight session on Tuesday as a sell-off in high-flying
technology names continued from the prior week, while Tesla was
poised for its worst day in nearly six months after the stock
was passed over for inclusion in the S&P 500.
Ten of the 11 major S&P sectors were lower, with only the
defensive utilities SPLRCU group edging higher. News on Friday
that SoftBank 9984.T made significant option purchases during
the run-up in U.S. stocks added to investor nervousness.
Technology .SPLRCT once again dragged indexes lower with a
decline of nearly 3%, 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, up about 25%.
"Valuations were stretched and now that it is starting to
sell off a little bit, they are shaking the branches and some of
that weaker money is falling out," said Ken Polcari, chief
market strategist at SlateStone Wealth LLC in Jupiter, Florida.
"You have a lot of people that are just suddenly getting
very nervous because the sell-off the last three days has been
relatively rapid."
In late afternoon trading, the Dow Jones Industrial Average
.DJI was down 408.28 points, or 1.45%, at 27,725.03, the S&P
500 .SPX lost 66.07 points, or 1.93%, to 3,360.89 and the
Nasdaq Composite .IXIC dropped 330.44 points, or 2.92%, to
10,982.70.
Energy .SPNY shares also slumped 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.
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 17.47%, on pace for its biggest daily
percentage drop in almost six months 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 3.0% 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 3.0%, also tracking Treasury yields. US/
Value-linked stocks .IVX fell 1.2%, but outperformed the
broader market and a 2.4% decline in the growth-link index
.IGX . Wall Street's fear gauge .VIX climbed for the third
time in four sessions.
Fears 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 9.1% 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 45.9%.
Declining issues outnumbered advancing ones on the NYSE by a
2.57-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 2 new lows; the
Nasdaq Composite recorded 28 new highs and 45 new lows.