Jan 18 (Reuters) – Wall Street’s main indexes fell on Wednesday after weak economic data and dovish comments from Federal Reserve officials that the central bank may not stop raising interest rates anytime soon.
Before the market opens, US economic data shows Retail sales And producer price Dec fell more than expected. Also Manufactured in a US factory Dec fell more than expected and output in the previous month was weaker than previously thought.
Wall Street’s major averages showed gains for 2023 so far, said Sam Stovall, chief investment strategist at CFRA Research, adding that some investors saw the week’s data as an opportunity to take profits while others worried about the possibility of a recession.
“The market was overbought. Today’s economic data served as a trigger to start a profit-taking spell, and the biggest profit-taking groups performed the best last year,” said Stovall.
2:14 PM ET, Dow Jones Industrial Average (.DJI) The S&P 500 fell 434.27 points, or 1.28%, to 33,476.58. (.SPX) The Nasdaq Composite lost 42.57 points, or 1.07%, to 3,948.4. (.IXIC) It fell 87.02 points, or 0.78%, to 11,008.10.
The weakest sector of the day is the defensive consumer staples (.SPLRCD)Down more than 2%, and utilities (.SPLRCU)which was last down 1.8%.
Both the benchmark S&P and the blue-chip Dow were on track for their second straight losses, while the Nasdaq, if it were lower, would snap a seven-day winning streak.
US stocks started 2023 on a strong note, with the S&P closing up nearly 4% year-to-date on Tuesday, on hopes that moderation in inflationary pressures could prompt the Fed to dial back the size of its interest rate hikes.
About halfway through January, the S&P is up 2.7% for the month so far while the Nasdaq is up more than 5% and the Dow, the best performer of the three for 2022, is up 0.9%.
Before this, the president of St. Louis Fed James Bullard and Cleveland Fed President Loretta Meister The need for a rate hike of more than 5% has been emphasized to curb inflation.
The Fed’s commentary also highlighted the discrepancy between the US central bank’s terminal rate and market expectations, which peaked at 4.88% in June. Traders are now betting on a 25-basis point rate hike in February.
“The market is very optimistic that we’re going to have a soft landing and every time you get hawkish comments from the Fed, it seems like you’re not going to get that,” said Dennis Dick, trader at Triple D Trading.
Investors are also focusing on the fourth-quarter earnings season as a window into how corporate America is faring against a backdrop of higher interest rates.
Analysts now expect earnings from S&P 500 companies to decline 2.6% this quarter, according to Refinitiv data, compared with a 1.6% decline earlier in the year.
IBM Corporation (IBM.N) Morgan Stanley fell 2.6% after downgrading the company’s shares from “overweight” to “equal weight.”
primary beneficiaries Microsoft Corporation (MSFT.O) and Tesla Inc. (TSLA.O) Gains were erased by late afternoon trading, with Microsoft down 1.2% and Tesla down 2.7%.
Modern Inc (mRNA.O) rose 3.6% after reporting data that demonstrated the efficacy of its respiratory syncytial virus (RSV) vaccine.
PNC Financial Services Group Inc (PNC.N) The company was down 5.4% after missing fourth-quarter profit estimates.
The number of issues advanced to the NYSE decreased by a ratio of 1.38-to-1; On the Nasdaq, a 1.66-to-1 ratio favors the decliners.
S&P 500 posts 9 new 52-week highs and 2 new lows; The Nasdaq Composite recorded 71 new highs and 14 new lows.
Reporting by Sinead Carew in New York, Shreyshi Sanyal and Amrita Khandekar in Bengaluru; Additional reporting by Shubham Batra; Edited by Shaunak Dasgupta and David Gregorio
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