* March payrolls roughly in line with expectations
* E*Trade and Netflix weigh on S&P 500 and Nasdaq
* Dow off 1 pct; S&P 500 off 1.3 pct; Nasdaq down 2.6 pct
(Updates to close)
By Caroline Valetkevitch
NEW YORK, April 4 (Reuters) - Momentum shares like Netflix
and TripAdvisor sold off sharply for a second straight day on
Friday, giving the Nasdaq its worst day since February and
leaving investors anxious about how much further they may fall.
The big drop in momentum stocks overshadowed the day's
relatively strong March jobs data, which helped the Dow and S&P
500 hit intraday record highs early in the session.
Nasdaq's 2.6 percent loss follows a nearly 1 percent slide
on Thursday and puts the index more than 5 percent below its
closing high for the year, which was set on March 5.
The day's action in momentum names - typically high-growth
companies mostly in the tech and biotech sectors that led 2013's
rally - extends their recent selloff, which investors mostly
have been at a loss to explain.
"For the past couple of weeks, the high-beta, high-risk,
high-reward type plays have been underperforming the larger-cap
S&P 500 and even the Dow," said Joe Bell, senior equities
analyst with Schaeffer's Investment Research in Cincinnati.
He said it doesn't necessarily mean a longer-term pullback
is in store for the market, but he pointed out that "in the
short term, it's a concern. I think you want to see some of
those names come back into leadership here."
The S&P 500's biggest percentage decliners included some
Nasdaq names: E*Trade Financial slid 7.8 percent to
$20.43; Netflix dropped 4.9 percent to $337.31, and
TripAdvisor fell 6.1 percent to $85.69.
Price-to-earnings ratios for the momentum names typically
are much higher than average. For instance, TripAdvisor's P/E is
42.5 and Netflix's is 87.8, while the P/E for the S&P 500 is
15.4, according to Thomson Reuters data.
The Dow Jones industrial average fell 159.84 points
or 0.96 percent, to close at 16,412.71. The S&P 500 lost
23.68 points or 1.25 percent, to finish at 1,865.09.
The Nasdaq Composite ended at 4,127.726, down
110.014 points or 2.6 percent, its worst daily percentage loss
For the week, the Dow rose 0.6 percent and the S&P 500
gained 0.4 percent, while the Nasdaq fell 0.7 percent.
Momentum names appeared to stabilize earlier this week
before resuming their decline on Thursday.
Two weeks ago, Gilead Sciences' stock dropped after
U.S. lawmakers asked it to explain the $84,000 price tag of its
new hepatitis C drug Sovaldi, and that decline set off a wave of
losses in other biotech and momentum names.
"Technically, the S&P and Dow look much stronger than the
tech indices," Bell said.
The Nasdaq biotech index dropped 4.1 percent to
2,356.60. The index is down about 18 percent from its lifetime
high reached in February.
For the day, Biogen Idec Inc dropped 4.5 percent to
end at $288.27, while Gilead Sciences slid 2.4 percent
to close at $72.20.
Earlier in the day, the S&P 500 touched a lifetime high of
1,897.28, the third time this week that the index set an
intraday record, while the Dow hit an intraday record high of
The government's nonfarm payrolls report showed a solid pace
of hiring for a second month, suggesting the economy appears to
be recovering from a winter slowdown.
Employers added 192,000 jobs in March, just shy of the
200,000 forecast, after hiring 197,000 in February. The
unemployment rate was unchanged at 6.7 percent, according to the
Shares of Halozyme Therapeutics Inc plunged 27.3
percent to close at $8.43 after the company said it was
temporarily halting enrollment of patients and dosing of its
cancer drug in a mid-stage trial on patients with pancreatic
cancer, after the recommendation of an independent safety
Decliners beat advancers on the NYSE by 1,987 to 1,043 and
on the Nasdaq by 2,217 to 446.
About 7.6 billion shares changed hands on U.S. exchanges,
well above the 6.3 billion average so far this month, according
to data from BATS Global Markets.
(Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)