Technology stocks are dragging Wall Street down ahead of the Fed’s decision

  • Starbucks is rising on strong US demand
  • All eyes on the Fed’s policy statement at 14.00 ET
  • Indexes down: Dow 0.26%, S&P 0.57%, Nasdaq 1.47%

May 4 (Reuters) – Wall Street’s main indices fell on Wednesday as a rise in US government interest rates hit growth stocks ahead of a generally expected rate hike that may be the largest since 2000.

Six of the 11 major S&P sectors rose, with energy (.SPNY) and tools (.SPLRCU) leading the way.

Bank shares rose 0.3% after two-year interest rates from the US Treasury, the most sensitive to the Federal Reserve’s interest rate outlook, rose to the highest since November 2018. The 10-year reference rate peaked at 3% for the third day in a row.

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Strengthening returns continued to haunt megacap growth stocks. Microsoft Corp (MSFT.O), Google-mother Alphabet Inc (GOOGL.O), Meta Platforms (FB.O), Tesla (TSLA.O), (AMZN.O) and Nvidia (NVDA.O) fell between 1.5% and 4.1% and weighed on the S&P 500 and Nasdaq.

“It is this expectation that the Fed is going to raise (interest rates) by 50 basis points and that they are going to start giving more color to liquidate the balance sheet,” said Michelle Cluver, portfolio strategist at Global X ETFs.

“All of this is putting more pressure on growth stocks and putting upward pressure on your 10-year government returns.”

The Fed’s policy makers have largely telegraphed a double-barreled decision that will raise the Fed’s short-term target rate to a range between 0.75% and 1%, and launch a plan to cut the $ 9 trillion balance sheet. read more

The policy statement must be submitted at 14.00 EDT (1800 GMT).

The spotlight will be on Fed Chairman Jerome Powell’s press conference for new clues as to how far and how quickly the central bank is prepared to go in an attempt to bring down decades of high inflation.

Concerns about a blow to economic growth due to a hawkish Fed, mixed earnings from some major growth companies, the conflict in Ukraine and pandemic-related shutdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of sales. of.

“There’s still a lot of uncertainty in the economy, and you’re also seeing declining economic growth and headwinds globally that could negatively impact earnings and equities going forward. I’m not yet willing to say that’s the bottom, but we’d come down. Pretty much, “in Cluver.

Two separate sets of data showed that private employers employed the fewest workers in two years last month, while the expansion in the service sector unexpectedly lost some momentum in April. read more

At 11:38 ET the Dow Jones Industrial Average (.DJI) was down 86.54 points, or 0.26%, to 33,042.25, the S&P 500 (.SPX) was down 23.62 points, or 0.57% , at 4,151.86, and the Nasdaq. Composite (.IXIC) was down 184.93 points, or 1.47%, to 12,378.83.

Starbucks Corp (SBUX.O) grew 5.5% after the coffee chain saw quarterly comparable sales grow 12% in North America. read more

Livent Corp (LTHM.N) increased by 21.2% after delivering a better-than-expected quarterly result and strengthening its revenue prospects for 2022 on higher demand for lithium used in batteries for electric vehicles. read more

Falling issues were more than progress for a 2.03-to-1 ratio on the NYSE and for a 2.46-to-1 ratio on the Nasdaq.

The S&P index recorded a new 52-week high and 37 new sediments, while the Nasdaq recorded 22 new highs and 297 new sediments.

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Reporting by Devik Jain in Bengaluru; Editing Shounak Dasgupta and Anil D’Silva

Our standards: Thomson Reuters Trust Principles.

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