Dow Jones Industrial Average Plunges Nearly 300 Points, 'Overbought Biotechs' Push Nasdaq Composite Down 2%

U.S. stocks closed sharply lower Wednesday, with the blue-chip Dow Jones Industrial Average plunging nearly 300 points and the Nasdaq composite losing more than 2 percent. Although much of the decline Wednesday was attributed to data that revealed U.S. businesses spent less on investments for a sixth straight month in February, experts say that wasn't the sole reason.

“My assessment is that this is being driven mostly by an overbought tech sector and overbought biotechs,” said Keith Bliss, senior vice president and director of sales and marketing at Cuttone & Co. Inc.,, on the floor of the New York Stock Exchange. “Traders started rotating out of these names this morning to take some money, and once the machines picked up on this selling pressure, it was off to the slaughterhouse.”

The Dow Jones Industrial Average (INDEXDJX:.DJI), which measures the share prices of 30 large industrial companies, dropped 292.60 points, or 1.62 percent, to close at 17,718.54. The Standard & Poor's 500 (INDEXNASDAQ:.IXIC) lost 30.45 points, or 1.46 percent, to finish at 2,061.05. The Nasdaq composite (INDEXSP:.INX) plummeted 118.21 points, or 2.37 percent, to end at 4,876.52.

The Nasdaq's sharp losses Wednesday were mostly driven by a more than 4 percent drop in its biotechnology sector, down nearly 7 percent for the week. Losses were also brought on in midday trading from declines in semiconductor stocks, with the Nasdaq’s PHLX Semiconductor index (INDEXNASDAQ:SOX) tumbling more than 4 percent.

Economists are looking ahead to Thursday's economic calendar, which includes the government's weekly jobless claims released at 8:30 a.m. EDT.

Shares of Kraft Foods Group Inc. (NASDAQ:KRFT) soared more than 35 percent Wednesday to close at $83.17 after H.J. Heinz Company announced it will buy the company for $46 billion, creating world’s fifth-largest food and beverage company with annual revenue of $28 billion.

Meanwhile, shares of Kofax Ltd. surged 46 percent to end at $10.95 after printer manufacturer Lexmark International announced it would buy the software provider for around $1 billion. Lexmark shares climbed 5.7 percent to close at $43.13.

The U.S. dollar index, which measures the value of the greenback against a basket of major currencies, including the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc, dipped 0.34 percent Wednesday to $96.90. The dollar’s dip comes after the greenback surged to a 12-year high against the euro earlier this month. The euro rose more than 1 percent to $1.10 against the dollar Wednesday, after falling below $1.05 on March 12 for the first time since January 2003.

U.S. crude stockpiles remained at a record high for the 11th consecutive week, the most at any time in at least 80 years. However, a dip in the dollar helped U.S. crude close higher on Wednesday. Brent crude, the benchmark for global oil prices, added $1.20 to $56.31 a barrel, for May 15 delivery on the London ICE Futures Exchange. West Texas Intermediate crude, the benchmark for U.S. oil prices, added 3.6 percent to close at $49.21 a barrel for May 15 delivery on the New York Mercantile Exchange.