Wall Street in the red as Fed worries persist
Wall Street’s main indexes slipped on Tuesday as a stronger-than-expected reading on the U.S. services sector fed into expectations that the Federal Reserve will keep raising interest rates to tame inflation.
The tech-heavy Nasdaq .IXIC was set for its seventh consecutive day of losses in what could be its longest such losing streak since November 2016.
Rate-sensitive shares of Apple APPL.O, Amazon.com Inc AMZN.O and Microsoft Corp MSFT.O fell about a percent each as benchmark U.S. Treasury yields rose to their highest levels since June. US/
“The primary concern by far, for almost everyone, is really just what’s going to happen with the Fed and interest rates,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
“While the Fed’s definitely going to keep hiking its interest rates, I think there’s zero question about that. The only question is how much and how fast.”
A survey from the Institute for Supply Management (ISM) showed the U.S. services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.
However, numbers from S&P Global showed services sector PMI fell short of flash estimates for August.
Traders see about 75% chance of a third 75-basis-point rate hike at the Fed’s policy meeting later this month. FEDWATCH
Focus will be on Fed Chair Jerome Powell’s speech on Thursday as well the U.S. consumer prices data next week for clues on the path of monetary policy.
Markets started September on a weak note as hawkish comments from Fed policymakers and data signaling momentum in the U.S. economy raised fears of aggressive interest rate hikes.
The benchmark S&P 500 .SPX closed at a six-week low on Friday as worries about the European gas crisis overshadowed relief from the monthly jobs data, which pointed to a slight easing of wage pressures. The index is down nearly 18% so far this year, while the Nasdaq has shed nearly 26% as rising interest rates hurt megacap technology and growth stocks.
Among the major S&P sectors, consumer discretionary .SPLRCD and communication services .SPLRCL fell the most, while defensive utilities .SPLRCU and real estate .SPLRCR rose.
At 12:17 p.m. ET, the Dow Jones Industrial Average .DJI was down 104.63 points, or 0.33%, at 31,213.81, the S&P 500 .SPX was down 9.49 points, or 0.24%, at 3,914.77, and the Nasdaq Composite .IXIC was down 49.39 points, or 0.42%, at 11,581.47.
The CBOE Volatility index .VIX, also known as Wall Street’s fear gauge, rose to 26.5 points.
Bed Bath & Beyond Inc BBBY.O fell 16.6% after Chief Financial Officer Gustavo Arnal fell to his death from New York’s Tribeca skyscraper.
Digital World Acquisition Corp DWAC.O tumbled 16.3% after Reuters reported the blank-check acquisition firm that agreed to merge with Donald Trump’s social media company failed to secure enough shareholder support for an extension to complete the deal.
Declining issues outnumbered advancers for a 1.91-to-1 ratio on the NYSE and 1.72-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 22 new lows, while the Nasdaq recorded 16 new highs and 253 new lows.