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Saturday, December 10, 2022

Wall Street, tech stocks stumble on fears of aggressive Fed

Wall Street, tech stocks stumble on fears of aggressive Fed

Traders work on the floor of the New York Stock Exchange (NYSE) on April 4, 2022 in New York City, US. Reuters/Brendan McDermid

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  • Fed’s Brainard sees rapid balance sheet runoff
  • Nasdaq records biggest one-day drop in a month
  • Twitter turns profit on plans to have Elon Musk on board
  • Spirit Air shares jump on JetBlue bid report
  • Index down: Dow 0.8%, S&P 1.26%, Nasdaq 2.26%

April 5 (Reuters) – Wall Street’s main indexes fell on Tuesday, driven by weakness in tech and other growth stocks, following comments from Federal Reserve Governor Lyle Brainard about potentially aggressive actions by the central bank to control inflation. shook investors.

Tech-heavy Nasdaq (.IXIC) posted its biggest daily percentage drop in nearly a month, with heavyweights such as Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) falling.

At a conference call on Tuesday, Brainard said he expects systematic interest rate hikes and sharp reductions in the Fed’s balance sheet to push US monetary policy to a “more neutral position” later this year, and as needed. Will be stricter to follow. read more

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Brainard’s comments “drive home the point that the Fed is poised to be more aggressive,” said Christina Hooper, chief global markets strategist at Invesco.

“It’s definitely having a negative impact on equities as it increases the likelihood of a recession,” Hooper said. “It’s going to be harder for the Fed to make soft landings more aggressive.”

The Dow Jones Industrial Average (.DJI) fell 280.7 points, or 0.8%, to 34,641.18, the S&P 500 (.SPX) fell 57.52 points, or 1.26%, to 4,525.12, and the Nasdaq Composite (.IXIC) fell 328.39 points, or 2.26%, to 14,204.17.

Among the S&P 500 sectors, technology (.SPLRCT) declined 2.2%, while consumer discretionary (.SPLRCD) declined 2.4%. The utility sector (.SPLRCU) grew 0.7%.

US Treasury yields hit multi-year highs as yields rose after Brainard’s comments.

The prospect of a more aggressive Fed led to a rocky start to the year for equities, and especially for tech and growth stocks, whose valuations are under more pressure from higher bond yields. Stocks have rebounded in recent weeks, with the S&P 500 down about 5% so far this year.

The focus on the Fed will continue on Wednesday, when the central bank releases the minutes of its March meeting.

“For the rest of this week, the market will be driven by interest rates and will be driven by the Fed’s comments about interest rates,” said Peter Tuz, president of the Chase Investment Council in Charlottesville, Virginia.

Investors are also focusing on the Ukraine crisis, which has led to rising commodity prices that stand to worsen an already worrying inflationary picture. read more

In economic news, data showed US services industry activity picked up in March as pandemic restrictions eased back, but businesses faced higher costs as supply tensions persisted. read more

In company news, shares of Twitter Inc. (TWTR.N) rose 2%, adding to their pre-day surge, as the social media company said it would appoint Tesla CEO and entrepreneur Elon Musk as its director. will be offered a seat in the Board. read more

Shares of Carnival Corp (CCL.N) were up 2.4% after the cruise operator reported its highest booking week in its history. read more

Shares of Spirit Airlines (SAVE.N) climbed 22.5% after reports that JetBlue Airways (JBLU.O) has offered to buy Spirit. read more

reducing issues moving forward at a 4.33-to-1 ratio on the NYSE; On the Nasdaq, a 2.96-to-1 ratio favored the decline.

The S&P 500 posted 42 new 52-week highs and 8 new lows; The Nasdaq Composite posted 55 new highs and 100 new lows.

About 11.4 billion shares changed hands on US exchanges, compared to a daily average of about 13 billion over the past 20 sessions.

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Reporting by Lewis Kraskoff in New York, Editing by Bansari Mayur Kamdar and Praveen Paramasivam, Shaunak Dasgupta, Matthew Lewis and David Gregorio in Bengaluru

Our Standards: Thomson Reuters Trust Principles.

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