Wall Street drops one percent after Dow's record-breaking surge

U.S. stocks tumbled 1 percent on Thursday in a broad-based decline led by energy shares, giving back some of the gains from a spectacular rally a day earlier that helped the blue-chip Dow Jones Industrial Average surge more than 1,000 points for the first time ever.

All the 11 S&P sectors fell more than 1 percent and all the 30 components of the Dow Jones Industrial Average were in the red.

A drop in oil prices led to a 2.21 percent drop in the energy index, while technology and consumer discretionary stocks shed 1.54 percent and 1.77 percent, respectively.

At 9:48 a.m. ET the Dow Jones Industrial Average was down 387.30 points, or 1.69 percent, at 22,491.15, the S&P 500 was down 39.21 points, or 1.59 percent, at 2,428.49 and the Nasdaq Composite was down 98.10 points, or 1.50 percent, at 6,456.25.

Wednesday`s rebound, which also helped all three indexes notch their largest daily percentage gains in nearly a decade, was fueled by a strong U.S. holiday sales report, a jump in oil prices and investors reversing bets against a wide range of stocks after four days of declines.

The rally was because the market was very oversold and small investors mostly boosted the market higher, said Naeem Aslam, chief market analyst at Think Markets UK Ltd in London.

"Traders will be booking profits from the gains they made yesterday and that will be the major focus for investors," Aslam added.

Despite Wednesday`s rally, the Dow and S&P are still down more than 10 percent for the month, on pace for their biggest monthly percentage drop since February 2009.

Weighing on sentiment was President Donald Trump`s comment that he was prepared to wait as long as it takes to get funding for his U.S.-Mexico border wall, a demand that has triggered a partial shutdown of the federal government that is now in its fifth day.

Congress was scheduled to reconvene after a holiday break on Thursday and resume debate on the matter.

Separately, Reuters reported Trump is considering an executive order in the new year that would bar U.S. companies from using telecommunications equipment made by China`s Huawei Technologies Co Ltd and ZTE.

This comes as China and the United States plan face-to-face consultations to resolve their trade dispute, which has rocked stock markets, along with concerns over slowing economic growth and rising interest rates.

After strong holiday sales report from Mastercard on Wednesday, investors will watch for the consumer confidence data due at 10:00 a.m. ET, which is likely to show the index fell to 133.7 in December from 135.7 in the month before.

Declining issues outnumbered advancers for a 5.52-to-1 ratio on the NYSE and for a 3.13-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and one new lows, while the Nasdaq recorded three new highs and 89 new lows.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)