By Bansari Mayur Kamdar and Praveen Paramasivam
(Reuters) -Wall Street’s main indexes fell for a third straight session on Thursday, as growth stocks extended losses on concerns over a more hawkish Federal Reserve and the war in Ukraine.
The tech-heavy Nasdaq took the biggest hit among the three main indexes, falling more than 1% and adding to a near 4.5% drop over the past two sessions.
Mega-cap growth stocks have come under pressure this week after comments from Fed policymakers and minutes from the central bank’s March meeting suggested a rapid removal of stimulus measures put in place during the pandemic.
St. Louis Federal Reserve President James Bullard said the the U.S. central bank’s short term policy rate should reach 3.5% later this year.
Minutes released on Wednesday showed that Fed officials “generally agreed” to cut up to $95 billion a month from the central bank’s asset holdings even as the war in Ukraine tempered the first U.S. interest rate increase since 2018.
Traders now see 88.9% likelihood of a 50 basis points rate hike at the central bank’s meeting next month. [IRPR]
“There’s really nothing to support the markets probably between now and the earning season,” said Anastasia Amoroso, chief investment strategist at iCapital Network, an investment marketplace firm.
“The realization for investors continues that the Fed is still not at max hawkishness and we’re going to err on the side of them wanting to do more to continue to control inflation. Against that backdrop, it’s really a struggle for equities to perform.” Tesla Inc, Meta Platforms Inc, Apple Inc, Amazon.com Inc and Alphabet Inc fell between 0.7% and 2.4%.
Meanwhile, defensive stocks like consumer staples hit an all-time high.
Adding to the cautious mood, Russian Foreign Minister Sergei Lavrov said Ukraine had presented Moscow with a draft peace deal that contained “unacceptable” elements, while the U.S. Senate voted to remove “most favored nation” trade status for Russia in one bill and ban oil imports in another.
At 12:36 a.m. ET, the Dow Jones Industrial Average was down 164.08 points, or 0.48%, at 34,332.43, the S&P 500 was down 23.02 points, or 0.51%, at 4,458.13, and the Nasdaq Composite was down 151.05 points, or 1.09%, at 13,737.76.
In economic news, data showed the number of Americans filing new claims for unemployment benefits fell last week, indicating a further tightening of labor market conditions heading into the second quarter that could contribute to keeping inflation elevated.
Among other movers, HP Inc jumped 16.4% after Warren Buffett’s Berkshire Hathaway Inc disclosed that it had purchased nearly 121 million shares of the personal computing and printing company.
American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co and United Airlines Holdings Inc fell between 3.0% and 5.0% after Barclays warned of a recent jump in oil prices hurting first-quarter earnings.
U.S. companies will start reporting first-quarter results in the coming weeks, with banks set to kick off the season in earnest next week.
Declining issues outnumbered advancers for a 2.36-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 2.64-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and 25 new lows, while the Nasdaq recorded 34 new highs and 183 new lows.
(Reporting by Bansari Mayur Kamdar and Praveen Paramasivam in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva)