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Skittish investors pummel technology stocks

The stock of Vertex Pharmaceuticals, with new offices in South Boston, tumbled 6 percent.
The stock of Vertex Pharmaceuticals, with new offices in South Boston, tumbled 6 percent.Dina Rudick/Globe Staff /2014 file

NEW YORK — The high-flyers are laying the stock market low — once again.

Investors turned against biotech, Internet, and other once-soaring stocks on Thursday, driving the Nasdaq Composite index to its worst day since November of 2011.

The sell-off in tech names dragged down the broader market and left all the major US indexes in the red for the year.

Steep declines in tech, followed by rebounds, have become a familiar pattern in the stock market in recent weeks. After falling Monday, the Nasdaq and other major index rallied over the next two days.

On Thursday, stocks dropped again, led once more by biotech and technology companies.


The slide represents a shift in investor psychology. After chasing their huge gains in 2013, investors are worried that stocks like Facebook and Gilead Sciences, which doubled last year, have become too expensive.

The rout started slowly and picked up speed throughout the day. Few companies escaped the sell-off. Of the Nasdaq’s 100 largest stocks, only one, C.H. Robinson Worldwide, a freight company, ended higher.

The Nasdaq ended the day down 129.79 points, or 3.1 percent, to 4,054.11. It is now down 7 percent from its recent high reached March 5.

Shares of some Massachusetts biotechs dropped at a steeper rate than the overall index. Vertex Pharmaceuticals stock plunged 6 percent to $65.75, Ironwood Pharmaceuticals fell 5.4 percent to $10.32, Biogen Idec gave up 4.4 percent to $287.35, and Cubist Pharmaceuticals lost 3.6 percent to $67.37.

Other major indexes also fell, but not as much.

The Standard & Poor’s 500 index dropped 39.10 points, or 2.1 percent, and the Dow Jones industrial average lost 266.96 points, or 1.6 percent.

Several factors probably combined to send stocks lower, said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.


Frederick said that recent IPOs, many of them tech and biotech companies, have become overheated. At the same time, the market hasn’t had a 10 percent decline since the spring of 2012.

‘‘We've been due,’’ Frederick said. ‘‘We haven’t really had a good catalyst for one, but the quarter’s over, we have an earnings season, we have some stocks that are a little overheated, there’s just a lot of small negatives that are sort of piling together and creating this confluence of anxiety.’’

Frederick said it made sense that former high-flyers like biotech would have the biggest drops ‘‘because that’s where the risk money is, and when people get a little spooked, they’re going to pull out of that.’’

The market’s drop wiped out gains made earlier in the week.

On Wednesday, minutes from the Federal Reserve’s latest meeting reassured investors that the central bank wasn’t in a hurry to raise interest rates. The S&P 500 had its best day in a month.The index remains near its record high.

Stocks had a huge run-up in 2013, and are in the sixth year of a bull market.