US traders can now catch their collectives breath after the choppiest trading session in several weeks.

It wasn’t as dramatic as the massive selloffs back in February and March (which still give me the shivers), but certainly a volatile day.

We’ll find out tomorrow whether investors are still spooked, so please pop back for more stock market and economic coverage.

In the meantime, you can catch up with all the latest developments in our main Covid-19 liveblog:

Goodnight. GW

Today’s losses mean the Dow is slightly negative for 2020, while the tech-heavy Nasdaq Composite index is still up 27% since January.

Worryingly, the amount of volatility in the markets has also risen.

Investing.com has the details:

A sharp rise in volatility also rattled investors, with the CBOE Volatility Index, the so-called fear index, surging 25% to a nearly two-month high.

Energy joined the selloff late as oil prices struggled amid ongoing concerns over the strength of crude demand.

Just five minutes to go until the closing bell....

Tesla continues to slide tonight, now down 9.6% at $404.

That means Elon Musk’s electric self-driving car company has lost almost 20% of its value since Monday night! Shares had surged to a record high at the start of the week, after Tesla split its stock - from $2,210 to $442.

Even so, Tesla are up nearly 400% this year, and only at a seven-session low. Still, anyone who bought on Monday might be a little concerned...

It’s important not to get carried away about today’s losses.

Sure, these are big daily moves. If you’re a $2.2 trillion company like Apple, a 7% plunge wipes out lots of value. Roughly $150bn, which is as much as Unilever (the biggest company in the FTSE) is worth today.

But one days falls don’t make much of a dent in the huge rally in FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) this year:

But.... it’s also important not to underplay it. These are really chunky moves:

Every sector of the Dow has fallen today, with technology down 5.6%, consumer cyclicals losing 2.8% and industrial stocks off 2.5%.

Apple remains the top faller on the storied index, down 7% at $122 - its lowest level since the stock split last weekend, followed by Microsoft (-5.8%) and new arrival Salesforce (-5.4%).

There’s no sign of a pick-up on Wall Street.

With an hour to go, the Dow is now down a chunk 900 points, or just over 3%.

It’s firmly on track for its worst day since June (to be fair, it’s had a lot of good days since then).

Here’s our news story about the drop in US jobless claims... and the methodological change behind it:

The futures market is currently suggesting that the UK FTSE 100 will open lower on Friday.

After falling 90 points today to 5850, the Footsie is currently down another 30 points in futures trading - which would take it to a new three-month low.

Neil Wilson of Markets.com shows how technical charting suggests it could drop another 200 points:

With less than two hours trading to go, US stock indices are wallowing at their lowest points of the day:

• Dow: down 825.41 or 2.84% at 28,275
• S&P 500: down 123 points or 3.44% at 3,457
• Nasdaq: down 557 points or 4.63% at 11,498

Tech shares are sinking today because investors are questioning the sustainability of lofty valuations racked up this year, writes Bloomberg’s Claire Ballentine.

“Frankly, the deeper the pullback in tech, the healthier is is for the overall market,” said Alec Young, chief investment officer at Tactical Alpha LLC. “The market was overbought, there were too many people chasing the tech names. It’s all healthy. The valuations have been stretched.”

The Cboe Volatility Index -- a measure of expected price swings for the S&P 500 Index known as Wall Street’s “fear gauge” -- rose to the highest level since July. Bitcoin fell as much as 7.6%.

Here’s the Financial Times’s take:

A sharp sell-off among the world’s largest technology shares sent the US stock market tumbling on Thursday, marking an abrupt change of course for companies that had driven the rally to record highs in recent days.

Apple shares sank more than 6 per cent in afternoon trading in New York, while Amazon, Alphabet and Microsoft all fell more than 4 per cent. There were even bigger drops for previous superstar stocks including Tesla and Zoom Video Communications.

The tech-heavy Nasdaq was down close to 5 per cent and on course for its worst one-day move in more than two months. The wider S&P 500 was down 3 per cent, after gains in 11 out of the 13 previous sessions.

Technology stocks benefited from rampant investor demand in recent months but have divided opinion on the sustainability of the rally.

Esty Dwek, head of global macro strategy for Natixis Investment Managers, has called today’s sell-off a ‘healthy breather’, Marketwatch reports.

Dwek argues that the long-term argument for holding tech shares is intact:

“Tech stocks, and the overall market, hadn’t really had a bad day since June, so this is a healthy breather. It was never just going to be a straight line up.

But the long-term structural support for technology has not changed and support for equities has not either.”

This handy heatmap shows the big fallers today:

Today’s market slide will not be well received in the White House.

Last night, president Trump tweeted excitedly that the Dow Jones had hit 29,000 points for the first time since February:

Right now, though, the Dow is down 700 points at 28,377. That would only be the lowest close in a week, so not a major reversal at this stage.

There was another reason for the stonking stock market rally since April -- the massive money-printing programme launched by the US central bank, as it cut interest rates back to near zero.

And funnily enough, one senior policymaker has just dropped a hint that the Federal Reserve really isn’t in any hurry to reverse that policy.

Atlanta Fed President Raphael Bostic told the Wall Street Journal that he wouldn’t worry if inflation jumped above the Fed’s goal of 2%, reaching up to about 2.4%, as long as prices remained broadly stable.

“As long as we see the trajectory moving in ways that suggest that we are not spiraling too far away from our target, I’m comfortable just letting the economy run and letting it play out.”

Today’s selloff could be quite disconcerting for the new army of retail investors who have been riding the markets higher.

Thanks to apps like Robinhood, more people have been buying stocks this year - and often picking winners such as the tech sector. Apple and Tesla’s stock splits encouraged this -- it made it cheaper to buy just a few shares, even though the actual company wasn’t more valuable.

More seasoned market players have worried that these new recruits could get burned fingers.

Mohamed El-Erian of Allianx warned in the FT this week that the rally had been driven by fear of missing out (FOMO, in market jargon). That’s not a great foundation for sustainable markets.

El-Erian explained that professional investors have been using derivatives to play the market - rather than actually buying shares whose value could tumble.

Over the past few weeks, the fear of missing out on an unceasing equity rally has increasingly been expressed through call options — contracts that give the right to buy at a fixed point in future — rather than straight equity longs.

That limits the amount at risk and gives users the ability to capture rallies. It has been supplemented by more downside “tail protection” aimed at safeguarding portfolios from sharp drops. With that, the Vix volatility index has decoupled from equity indices, adding to signals that a large market correction, should one materialise, would encourage more professional selling that could overwhelm the buy-the-dip retail investor.

This is a potentially troubling situation for central bankers, regulators and economists.

After a bruising morning on Wall Street, and an alarming late slide in Europe, here’s the state of play:

Cryptocurrency Bitcoin is also caught up in this selloff, currently down $700 or 6.2% at $10,671.

Fawad Razaqzada, analyst at ThinkMarkets, says investors had been warned to expect a tech selloff (although timing these things is rather tricky...).

Well, the warning signs were there after technology stocks kept pushing higher and the rally on the Nasdaq almost turned vertical. We have been seeing increased options volatility and valuations were becoming overstretched for some of the megacap technology shares.

What’s more, momentum indicators such as the Relative Strength Index on the major indices had reached extreme overbought levels, meaning even the most bullish speculators chasing momentum would have found it difficult to justify buying at such extreme levels.

And so the market sold off today and the selling gathered momentum as stops were presumably tripped with each broken support level. Short-selling undoubtedly added to the pressure.

As you can see here, the Nasdaq index has enjoyed a spectacular run since the market crash ended in late March.

It recovered all those losses by mid-June, and then surged sharply higher, and higher.

Today’s slump, the worst in almost three months, only takes the Nasdaq back to levels seen in late August.

But what investors are wondering, is... is this just a temporary decline, or something more serious?

Covid-19 does seem to have accelerated the move towards digital services, online working, and e-commerce, which is why everything from Apple (-6%) and Amazon (-4.6%) to Etsy (-7%) and Peloton (-8.4%) have surged this year. That’s not changed today... although, if a vaccine is rolled out soon then the global economy could return towards more normal conditions.

Also, the valuations of some tech companies have become extremely steep - Tesla overtook Visa to become the 7th most valuable US company this week.

Randy Frederick, vice-president of trading and derivatives for Charles Schwab in Austin, also reckons the sell-off is partly driven by profit taking:

He says (via Reuters):

“Some of the stocks have gotten a little pricey, and what the actual cause is to spark this selloff is difficult to say.

“The leading sector for quite a long time has been the Nasdaq, which is very heavily weighted in technology stocks so people just saw this as an opportunity to take the profits off the table.”

Salesforce, the cloud-based CRM software giant, is also caught up in today’s rout.

Its shares are down 5%, which sounds serious until you remember that they surged 25% last week after it reported strong results.

The same is (even more) true of Zoom. The video conferencing company’s shares have slumped 11% today.... three days after surging by a remarkable 40%, after posting blowout sales figures.

It’s a similar picture on the S&P 500 -- where tech companies like Juniper, nVidia and AMD are the major fallers today.

Many of these companies have been stock market darlings for months, as they’ve seen their sales boosted by the move towards remote working (and more time at home playing computer games, in nNivia’s case).

European tech stocks have taken a hammering too, plunging 3.9% in the biggest fall since late April.

Home meal delivery companies Hellofresh (-10%) and Delivery Hero (-7.8%) were badly hit, along with semiconductor firms STMicro (-6.9%) and Dialog (-7.6%).

David Madden of CMC Markets says traders are turning their backs on tech stocks, and banking profits following the huge rally since March.

In some cases, for good reasons:

Tesla shares are in the red. The stock closed lower in the past two sessions. It was reported that Baillie Gifford, an investment management group, trimmed their stake to below 5%, from 6.32%. The fund decided to cut its shareholding in the auto-maker because the recent bullish move inflated its exposure to the stock.

Smartsheet shares are offside today in the wake of the earnings miss that was announced last night. The second quarter loss per share was 22 cents, while the consensus estimate was for a loss per share of 16 cents. Revenue jumped by 41% to $91.2 million and that topped the $86.6 million forecast. It is worth noting the stock briefly set an intra-day record high yesterday in advance of the figures, so traders had high hopes ahead of the announcement.

NVIDIA, Intel and Micron are all in the red on the back of the news that China will develop its own semiconductors. The Trump administration is applying pressure to the Chinese government by limiting the access that Chinese companies have to chips, so the Beijing administration is keen to become self-sufficient.

The selloff may partly be triggered by today’s US jobless claims report, and new fears of a trade war.

As covered earlier, the number of Americans signing on for unemployment benefit fell last week, but remained worryingly high at 881,000. The near 19% surge in the US trade deficit has also given traders a jolt.

Edward Moya of OANDA explains:

Too many Americans need benefits and this will likely remain the case for the rest of the year.

The US trade deficit also expanded to the widest level since 2008, a troubling sign that US-China tensions are about to heat up even further. President Trump campaigned in 2016 that trade wars are good, and easy to win, so financial markets will look to see if he turns up the pressure against Beijing.

Shares in Apple, the world’s most valuable company, have fallen by 5% today.

At $124, Apple’s shares are now below the level at which they split last week (investors got four cheaper shares for each old one).

Although today’s selloff is chunky, it only takes the Nasdaq down to a one-week low....

The sight of Wall Street tumbling sharply has hit nerves in Europe.

The FTSE 100 has now swiftly lost 45 points, or 0.75%, in late afternoon trading. Mining stocks (sensitive to global growth) are among the main fallers, along with consumer-focused firms like Ocado, and Reckitt Benckiser.

All three US stock indices are now in the red, and heading for their biggest falls in over two month.

• Dow: down 311 points or 1% at 28,788, having hit a six-month high last night. Now up 1% for the year.
• S&P 500: down 63 points or 1.8% at 3,516, having hit a record high last night. Now up 9% for the year
• Nasdaq: down 416 points or 3.5% at 11,639, having hit a record high last night. Now up 30% for the year.

The tech selloff is accelerating, sending the Nasdaq down by around 3%.

It’s on track for its worst day since late June (although it’s not had many bad days recently...)

The stock market rally in Europe is fizzling out too.

The FTSE 100 index is now down by 4 points at 5937, with mining company BHP (-4.7%), online supermarket Ocado (-3%) and retailer Next (-2.9%) among the fallers.

Companies worst hit by the pandemic are rallying, though, with engineering firm Melrose up 14% after it told shareholders that summer trading had been stronger than feared.

France’s CAC is still strong, though, up 1.3% as investors welcome the new stimulus package of wage subsidies, investment, transport improvements and money for green energy.

Encouraging economic news from the US - the service sector grew in August at the fastest rate in 17 months.

Companies took on new staff, to help handle a jump in new business, reports data firm Markit. That lifted the US services PMI index to 55 (showing decent growth) from 50 (showing stagnation).

Although tech stocks are down, out-of-favour shares in banks and energy companies are up on Wall Street.

That’s helping the Dow Jones industrial average to rise above last night’s six-month high; currently it’s up 56 points or 0.2% at 29,157.

And we’re off..... and the tech shares are (as expected) taking a dip.

The Nasdaq Composite has fallen back from this week’s record high, losing 200 points or 1.6% to 11,856 points.

Over in the US, the boom in technology stocks may take a breather today.

The Nasdaq is down 1% in pre-market trading. That’s a rare sight in recent months, as the index has surged since the February-March crash and is up nearly 35% this year.

Apple is down 3% in pre-market trading while Tesla is down nearly 9%. Both companies split their stock last weekend, a move which triggered even more buying. Some of those gains may be unwinding, though....

Back on Costa Coffee’s job cuts...Julie Palmer, partner at Begbies Traynor, points out that new restrictions to protect customers will hurt its revenues:

“Like many others, Costa Coffee has only been able to generate a mere fraction of the revenue it would typically if open as usual. While the coffee chain was able to reopen last month, social distancing measures have had to be implemented, limiting the number of customers and potential earnings. Additionally, the lack of workers returning to offices has meant the regular trade from these consumers has been absent.

With the uncertainty seemingly not coming to an end any time soon, it has left the business with no option but to look to reduce costs, starting with its workforce.

She fears that yet more hospitality companies will cut jobs, especially as the looming winter months will make outdoor eating and drinking much less appealing.

Attempts are being made by some businesses to work with local councils in order to utilise outdoor spaces where consumers feel more comfortable, but with winter approaching, they are running out of time. It’s likely that as businesses try to recoup their losses from the past few months, many others will follow a similar suit to Costa Coffee.”

In other economic news... the US trade deficit has surged as Americans imported much more than they exported.

Marketwatch has the details:

The U.S. trade deficit jumped 18.9% in July owing to a big snapback in imports, the government said Thursday.

The trade gap increased to $63.6bn from $53.5bn in the prior month - above the $58.9 billion MarketWatch forecast.

Imports shot up 10.9% while exports advanced 8.1%. The increase in both imports and exports is a good sign in many ways, pointing to stronger consumer spending at home and increased demand for American-made goods abroad.

Yet global trade is still considerably weaker compared to before the coronavirus pandemic and it will take time to recover.

Britain’s retail sector has already suffered hefty job cuts, and Costa’s move will add to the UK’s unemployment woes.

In recent months, several major chains have announced redundancies plans, with Marks & Spencer cutting 7,000 jobs, Boot’s laying off 4,000 workers, and Pret a Manger lowering its UK headcount by almost 2,900.

Debenhams, Dixons Carphone, DW Sports, WH Smiths, Burberry, Ted Baker and River Island have also announced job cut plans.

Retailers are reel from store closures during the pandemic, weak footfall on the high street, and the move towards online shopping.

Costa says it’s cutting jobs now because there is so much economic uncertainty, even though sales have begun to recover.

Costa closed nearly all 2,700 of its UK stores for six weeks during the pandemic.

Since May, stores have been re-opening as safely and as quickly as possible, with over 2,400 stores now trading. While trade is returning, helped by the Government’s VAT reduction, which Costa passed on to customers in full, and the recent “Eat Out To Help Out” Scheme, there remain high levels of uncertainty as to when trade will recover to pre-COVID levels.

The drop in eurozone retail sales last month (see here) shows that Covid-19 is still having a serious impact on the region’s economy, says Josie Dent, senior economist at the CEBR:

The retail recovery in the eurozone came to an abrupt halt, with a 1.3% monthly contraction in sales volumes in July. These worse-than-expected figures highlight that we are not yet clear of the impacts of the coronavirus pandemic on eurozone economies.

While job retention schemes are in place, households’ incomes and spending power are somewhat protected from the impacts of the recession. However, governments cannot finance such schemes indefinitely.”

Online mattress seller Eve has just hiked its sales guidance, after enjoying strong trading this year.

Eve saw a jump in sales during the early stage of the pandemic, and this hasn’t fizzled out yet. It told shareholders:

Trading was strong in May and June and this momentum continued into early July. Since then trading patterns have remained above the Board’s expectations through the rest of July and August.

This could be another sign that consumers have been sprucing up their homes, using the savings from not commuting to work or eating and drinking out as often.

Paul Ashworth, director of Preston business We Brand 4 You, say he’s experienced the jump in delayed and unpaid invoices first-hand:

In my sector, and I suspect in most others, the impact of the coronavirus on cashflow through late payments has been devastating.

When the country went into lockdown, companies that would typically pay us on delivery were suddenly taking three or four months to settle their invoices.“The cashflow pinch caused by Covid-19 is a major reason why so many companies have gone to the wall.

The process of chasing down invoices during the early months of the pandemic was exhausting and clearly meant you couldn’t focus on new business, which meant further damage to your business.

What we’re also now seeing is a lot of companies changing their invoice terms to protect themselves and their cashflow. Sadly, for the average small business, it’s simply a case of like it or lump it.”

Duncan Brock of the Chartered Institute of Procurement & Supply, fears that UK services companies will keep cutting jobs this autumn.

Here’s his take on August’s service sector PMI report:

“As the UK economy continues to wake from its pandemic slumber, the services sector reported a higher than expected rise in new orders and at the strongest levels since December 2016. Buoyed up by increased consumer spending from domestic markets and unfettered by lockdown measures, businesses continued to be optimistic even though obstacles to stronger growth lingered on.

Export business remained subdued as overseas sales declined for the seventh month in a row, hampered by unsettled supply chains and continuing restrictions on logistics and travel. The distressing employment numbers also darkened the mood with a high number of job cuts this month. Government support was a blessing to many firms but as this comes to an end, many service providers are resorting to redundancy schemes under the weight of operating in a tough marketplace.

With rising input costs for fuel and essential safety equipment and a potential downturn in business again, the ripple effect of this pandemic will be felt throughout the winter. Firms need to make some lasting headway to give this recovery some energy, so policymakers should be waiting in the wings to offer more support if needed.

Speaking of vaccines.... GlaxoSmithKline and Sanofi have said they’re ready to start testing their protein-based Covid-19 vaccine on humans for the first time.

The move follows promising results in earlier studies, as my colleague Joanna Partridge explains:

GSK, the world’s largest vaccine maker, and the French drugmaker Sanofi joined forces in April to work on an effective treatment to halt the deadly pandemic.

The vaccine being developed by London-headquartered GSK and Paris-based Sanofi combines existing technology used by Sanofi to make its flu vaccine, along with an add-on from GSK, known as an adjuvant, which can be mixed with a vaccine to trigger a stronger immune reaction.

The firms said the clinical trial, which includes 440 healthy adults in the US, is designed to evaluate the safety, tolerability and immune response of the vaccine, and it is hoped that first results will be received in early December 2020.

France’s stock market just hit its highest level since mid-July, while German stocks are back at levels last seen in February:

Conner Campbell of SpreadEx says:

Fuelled by hopes of stimulus stateside, and actual stimulus on the continent, the European markets surged out of the gates on Thursday.

Leading the charge was the CAC, following the unveiling of the ‘France Relaunch’ plan – a €100 billion spend on various measures, including jobs, the environment, and making the country’s economy ‘more competitive’. Obviously overjoyed, the French index rose 1.9%, lifting it to a 6-week-plus peak of 5115.

The DAX wasn’t too far behind, jumping 1.8% – or 200 points – to cross 13400, its best level since the end of February.

Stocks are also getting a currency lift this morning - the euro has fallen against the US dollar, amid speculation that the European Central Bank could launch fresh stimulus moves soon (after inflation turned negative last month).

European stock markets have opened strongly this morning, led by Paris.

The EU-wide Stoxx 600 index has rallied by 1%, adding to yesterday’s gains, with the French CAC jumping 1.6%.

In London, the FTSE 100 has gained 50 points to 5991.

France’s economic recovery package has lifted the mood in the markets, along with optimism that a Covid-19 vaccine could be released soon.

Health officials across the US have reportedly been told to expect one for health workers and high-risk groups by early November (just in time for the presidential election?).

French Prime Minister Jean Castex says the €100bn recovery plan could create 160,000 jobs by 2021, as well as erasing the economic impact of the coronavirus crisis.