Wall Street is being dragged down by tech stocks ahead of Fed announcement

Wall Street is being dragged down by tech stocks ahead of Fed announcement

Strengthening yields continued to haunt megacap growth stocks. Microsoft Corp, Google-parent Alphabet Inc , Meta Platforms, Tesla, Amazon.com and Nvidia fell between 1.5% and 4.1% and weighed on the S&P 500 and the Nasdaq. “There is this expectation that the Fed is going to be raising (rates) by 50 basis points and that they’re going to start providing more color on winding down their balance sheet,” said Michelle Cluver, portfolio strategist at Global X ETFs.

Growth stocks were hammered by a jump in US Treasury yields on Wednesday, causing Wall Street’s main indexes to fall ahead of a widely expected interest-rate hike that might be the biggest since 2000. Energy and utilities led the advances in six of the 11 major S&P sectors. Bank stocks rose 0.3 percent after two-year Treasury rates, which are the most sensitive to the Federal Reserve’s interest rate outlook, reached their highest level since November 2018. For the third day in a row, the benchmark 10-year yield surpassed 3%.

“This is all leading to more pressure on growth equities and putting upward pressure on your 10-year treasury yields.” Fed policymakers have widely telegraphed a double-barreled decision that would lift the Fed’s short-term target policy rate to a range between 0.75% and 1%, and set in motion a plan to trim its $9 trillion balance sheet.

The policy statement is due at 2 p.m. EDT (1800 GMT). The spotlight will be on Fed Chair Jerome Powell’s news conference for fresh clues on how far and how fast the central bank is prepared to go in an effort to bring down decades-high inflation.

Concerns about a hit to economic growth due to a hawkish Fed, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, with richly valued growth stocks bearing the brunt of the sell-off. “There’s still a lot of uncertainty in the economy, and you’re also seeing slowing economic growth and headwinds globally that could adversely affect earnings and stocks going forward. I’m not yet willing to say it’s the bottom, but we have come down quite a lot,” Cluver said.

Two separate sets of data showed private employers hired the fewest workers in two years last month, while expansion in the services sector unexpectedly lost some momentum in April. At 11:38 a.m. ET, the Dow Jones Industrial Average was down 86.54 points, or 0.26%, at 33,042.25, the S&P 500 was down 23.62 points, or 0.57%, at 4,151.86, and the Nasdaq Composite was down 184.93 points, or 1.47%, at 12,378.83.

Starbucks Corp gained 5.5% after the coffee chain saw quarterly comparable sales grow 12% in North America. Livent Corp surged 21.2% after it posted a better-than-expected quarterly profit and bolstered its 2022 revenue outlook on higher demand for lithium used in electric vehicle batteries.

Declining issues outnumbered advancers 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 one new 52-week high and 37 new lows, while the Nasdaq recorded 22 new highs and 297 new lows.

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