US STOCKS-Nasdaq slides as tech rout deepens, Tesla hits three-week low

* Tesla tumbles after not being included in S&P 500

* GM jumps after taking stake in electric-truck maker Nikola

* Sell-off in FAANG stocks resumes

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

* Indexes off: Dow 1.80%, S&P 2.08%, Nasdaq 2.85% (Adds comment, details and updates share prices to midday)

Sept 8 (Reuters) - 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.

All eleven major S&P sectors fell in early trading, with declines worsening after news on Friday that SoftBank made significant option purchases during the run-up in U.S. stocks.

Energy, financial and information technology stocks were among the biggest decliners.

“To see a period of carnage is reasonable, considering the massive run up that we have experienced since the early part of the year,” said Eric Schiffer, chief executive officer of private equity firm Patriarch Organization in Beverly Hills, California.

“We’ll need some time to see whether this is a fundamental shift versus a technical on exhibit, because if it is a shift to fundamentals, that is not a position where you’re going to want to necessarily buy a dip.”

Media reports of SoftBank’s option purchases also reminded 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.

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 as investors booked profits after a run that boosted the index about 70% from its pandemic-lows.

At session lows on Tuesday, Facebook, , Apple, Tesla, Microsoft, Alphabet and Netflix - together known as “FAATMAN” - collectively lost more than $1 trillion in market capitalization since Sept. 2.

Tesla plunged another 15.4% to a three-week low after the electric-car maker was excluded from a group of companies being added to the S&P 500.

At 11:46 a.m. ET, the Dow Jones Industrial Average was down 507.62 points, or 1.80%, at 27,625.69, the S&P 500 was down 71.45 points, or 2.08%, at 3,355.51, and the Nasdaq Composite was down 322.12 points, or 2.85%, at 10,991.01.

Value-linked stocks such as banks fell 1.7%, but outperformed a 2.3% decline in the growth-link index.

Wall Street’s fear gauge climbed for the third time in four sessions.

Fears over potential U.S. sanctions against China’s biggest chipmaker SMIC hit domestic suppliers, with Applied Materials Inc, Lam Research Corp and KLA Corp dropping between 7% and 8.6%.

General Motors Co jumped 8.7% after it acquired an 11% stake, worth $2 billion, in U.S. electric-truck maker Nikola Corp. The truck maker’s shares surged 37%.

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.

Declining issues outnumbered advancers more than 3-to-1 on the NYSE and 2-to-1 on the Nasdaq.

The S&P index recorded no new 52-week high and two new lows, while the Nasdaq recorded 22 new highs and 40 new lows. (Reporting by Medha Singh and Devik Jain in Bengaluru; Additonal reporting by Tom Westbrook in Singapore; Editing by Bernard Orr, Sagarika Jaisinghani)