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US STOCKS-Nasdaq futures tumble 2% as tech stocks get hammered

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* Tesla tumbles on being excluded from the S&P 500

* FAANG stocks fall more than 3%

* Fears over U.S. sanctions on SMIC pressure chip stocks

* Futures off: Nasdaq 2.60%, Dow 0.36%, S&P 0.96% (Adds comment, details; updates prices)

Sept 8 (Reuters) - Nasdaq futures tumbled on Tuesday as traders returning from a long weekend sold off shares of Tesla and other tech heavyweights, while simmering U.S.-China tensions and concerns over a rocky economic rebound also weighed on sentiment.

Wall Street’s tech-fueled rally halted last week with the Nasdaq closing 6% below its record closing high. Investors booked profits, taking advantage of a rally that lifted the index about 70% from its pandemic-low in March.

The Nasdaq closed Friday with its biggest weekly decline since the height of the pandemic-linked sell-off in March, with shares of Facebook Inc, Amazon.com Inc, Apple Inc, Netflix Inc and Google-parent Alphabet Inc sliding between 1.4% and 3.7%.

The group - commonly known as “FAANG” stocks - have been largely responsible for the rebound on Wall Street even as data points to a faltering recovery for the domestic economy. The companies were down between 3.1% and 4.1% in premarket trading.

Tesla Inc plunged 12.6% trading after the electric-car maker was excluded from a group of companies being added to the S&P 500.

Meanwhile, media reports said SoftBank made significant option purchases during the run-up in U.S. stocks, reminding investors that market makers might have billions of dollars worth of long positions 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.

Peng added that the six largest U.S. technology stocks now comprise 15% of the global market capitalization, all but squeezing shorts out completely.

“So there’s positioning hurdles to rise further, and the loss could be unpredictable”, he said.

At 7:36 a.m. ET, Nasdaq 100 e-minis were down 300 points, or 2.6%, Dow e-minis were down 101 points, or 0.36%, and S&P 500 e-minis were down 32.75 points, or 0.96%.

Fears over potential U.S. sanctions against China’s biggest chipmaker SMIC hit domestic suppliers, with Applied Materials, Lam Research and KLA Corp dropping between 3.8% and 4.9%.

U.S. President Donald Trump and Democratic rival Joe Biden are set to visit battleground states this week as some opinion polls show the race tightening with less than 60 days to go until the Nov. 3 election. (Reporting by Medha Singh in Bengaluru; Additonal reporting by Tom Westbrook in Singapore; Editing by Bernard Orr and Sagarika Jaisinghani)

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