Wall Street drops amid Fed rate debate
Major Wall Street indices tumbled, bogged down by the decline in shares of Apple and other megacaps, as investors braced for a steep rate hike from the Federal Reserve this week and assessed the trajectory of future interest rates.
The US Fed will meet on Tuesday and Wednesday, where policymakers are expected to make a fourth consecutive 75 basis point hike in interest rates to curb inflation, which has been high for decades.
Fed officials’ communication after the decision, along with this week’s non-farm payroll data, will offer further clues as to whether the central bank may ease its aggressive stance on interest rates going forward. Arriving.
Apple Inc fell 2.1% in early trading.
A Reuters report said that production of its iPhones could decrease by 30% next month due to the tightening of COVID-19 restrictions in China.
Shares of other megacaps, including Amazon.com, Google-owner Alphabet, and Microsoft and Meta Platforms, fell 0.8% to 3.0%.
Of the sectors, information technology and communications services were the most depressed, down by 1.6% and 1.9% respectively.
Hopes for a less aggressive Fed and better-than-expected earnings from companies outside the tech sector led the S&P 500 and Nasdaq to record their second consecutive week of gains on Friday.
Both indices are also expected to post gains in October after two consecutive months of decline.
The Dow, meanwhile, could see its largest monthly rise in over four decades depending on the day’s moves.
“You have a convergence between the labor market and the Fed, so this should make it a very questionable market week in terms of direction,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. .
“We will hear Fed Chairman Powell on Wednesday and his words probably mean more than his actions. If his tone, if his language starts to soften a little, it will continue to be positive for actions. “
According to the CME group’s Fedwatch tool, traders are almost equally divided in their expectations that the Fed will make a smaller interest rate hike at its next policy meeting, with the likelihood of a 50 basis point rate hike in December at 47.9%.
Along with the Fed, the mid-term elections in the United States will also set the tone for the markets in November.
In early Monday trading, the Dow Jones Industrial Average fell 184.99 points, or 0.56%, to 32,676.81, the S&P 500 fell 33.15 points, or 0.85%, to 3,867.91 and the Nasdaq Composite fell 145.57 points, or 1.31. per cent, to 10,956.88.
Falling issuance outperformed advances of 1.65 to 1 on the NYSE and 1.56 to 1 on the Nasdaq.
The S&P Index made 10 new highs in 52 weeks and five new lows, while the Nasdaq made 63 new highs and 47 new lows.
Among individual stocks, TuSimple Holdings plunged 45% after the trucking company said its board of directors fired its chief executive.