Wall Street’s main indexes slipped on Monday, with the tech-heavy Nasdaq down about 1%, as hawkish comments from a U.S. Federal Reserve official tempered hopes of the central bank toning down its aggressive monetary policy approach.
Federal Reserve Governor Christopher Waller, a voting member of the rate-setting committee this year, said on Sunday that markets should now pay attention to the “endpoint” of rate increases, not the pace of each move, and that the endpoint was likely “a ways off”.
The comments follow a softer-than-expected inflation report last week, which had buoyed hopes that the Fed could scale back its hefty interest rate hikes and helped drive a euphoric market rally.
The S&P 500 in the previous session logged its biggest weekly percentage gain in about five months, while the tech-heavy Nasdaq .IXIC notched its best week since March.
In the week ahead, focus will be on a slew of economic data including retail sales numbers on Wednesday as well as speeches by several Fed officials for further clues on the outlook for interest rates.
“The market is expecting the Fed to continue its hawkish rhetoric on rates. That could all change once we get more confirmation on inflation in December,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Traders now expect the Fed to hike interest rates in December by a half point, and expect terminal rate in the range of 4.75%-5.0% next year. FEDWATCH
At 9:42 a.m. ET, the S&P 500 .SPX was down 17.25 points, or 0.43%, at 3,975.68, and the Nasdaq Composite .IXIC was down 115.13 points, or 1.02%, at 11,208.20.
The Dow Jones Industrial Average .DJI was down 7.84 points, or 0.02%, at 33,740.02. Gains in drugmakers including Johnson & Johnson JNJ.N and Amgen AMGN.O limited declines on the blue-chip index.
As U.S. Treasury yields edged up, technology and growth names such as Microsoft Corp MSFT.O, Apple Inc AAPL.Oand Amazon.com Inc AMZN.O slipped between 1% and 3%. US/
The S&P 500 information technology sector .SPLRCT was down 1.2% and among the leading sectoral decliners on the benchmark index.
Tesla Inc TSLA.O fell 3.4% as Chief Executive Elon Musk said “I have too much work on my plate” when asked about his recent acquisition of Twitter and his leadership of the electric-vehicle maker.
Chinese leader Xi Jinping and U.S. President Joe Biden met on Monday for long-awaited talks that come as relations between their countries are at their lowest in decades, marred by disagreements over a host of issues from Taiwan to trade.
Among other stocks, Biogen Inc BIIB.O and Eli Lilly LLY.N gained 3.4% and 1.4%, respectively, after the failure of Swiss rival Roche’s ROG.S Alzheimer’s disease drug candidate.
Theater operator AMC Entertainment AMC.O jumped 6.5% as Marvel’s latest film “Black Panther: Wakanda Forever” grossed $330 million globally in its opening weekend, while Hasbro Inc HAS.O fell 7.4% after BofA Global Research downgraded the toymaker’s stock.
Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE and a 1.65-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 21 new lows.
U.S.-listed shares of Chinese companies rose, with Alibaba Group Holding Ltd BABA.N gaining 1.4% after China eased some of its strict COVID-19 rules.
Advancing issues outnumbered falling ones within the S&P 500 .AD.SPX by a 1.7-to-one ratio.
The S&PCore services prices rose 0.5%. Away from rents and other services, goods disinflation is broadening.
Prices of used cars and trucks plunged 2.4%. The cost of apparel declined for the second straight month as retailers offered discounts to move unwanted inventory.
There were also decreases in prices of furniture and bedding as well as appliances. As a result, core goods prices fell 0.4% after being unchanged in September, a function of slowing demand and recovering fractured global supply chains.
Airline fares declined 1.1%. Healthcare costs fell 0.5% as the government incorporated updated data used to estimate health insurance prices.
“The BLS methodology measuring health insurance prices has provided upward price pressure the last twelve months but should now give downward pressure the next year,” said Will Compernolle, a senior economist at FHN Financial in New York.