The Nasdaq tumbled on Tuesday as investors dumped high-flying technology stocks, while Tesla tracked its worst day in nearly six months after a surprise exclusion from the S&P 500 index of leading US shares.
At session lows on Tuesday, Facebook, Amazon.com, Apple, Tesla, Microsoft, Alphabet and Netflix - together known as "FAATMAN" - were collectively down more than $1 trillion (€845bn) in market capitalisation since September 2.
All eleven major sectors on the S&P index fell in early trading, with declines worsening after news on Friday that Japanese investor SoftBank made significant option purchases during the recent run-up in US stocks.
Financial and information technology stocks were among the biggest decliners.
Still, market participants said they did not expect a prolonged sell-off against the backdrop of an accommodative monetary policy by the Federal Reserve, which last week indicated a higher toleration for inflation rising above 2pc.
"I'm not going to throw in the towel here and say the tech run is over," said Dennis Dick, proprietary trader at Bright Trading in Las Vegas.
"It's still a healthy correction. We came a long way and it's time to cool off a little bit."
Media reports of SoftBank's option purchases also reminded investors that market makers might have billions of dollars worth of long positions - bets the market will rise - as hedges against options trades, which will have to be sold as prices fall.
"If you bought a lot of call options in the second quarter, you're doing very well, but that creates a problem for later when you need to unwind these positions," said Ken Peng, Citi Private Bank's head of Asia Investment Strategy.
Wall Street's tech-and-stimulus-led rally halted last week with the Nasdaq falling as much as 9.9% from its record closing high - hit just five days ago - as investors booked profits after a run that boosted the index about 70pc from its pandemic-lows.
On Tuesday Tesla plunged another 15.1pc to a three-week low after the electric-car maker was excluded from a group of companies being added to the S&P 500.
Fears over potential US sanctions against China's biggest chipmaker SMIC hit domestic Applied Materials, Lam Research and KLA, dropping between 6.6pc and 7.8pc.