Stocks fell again on Tuesday—with investors nervously looking ahead to the conclusion of the Federal Reserve’s policy meeting Wednesday—as Big Tech stocks led declines and new inflation data spooked markets.
The Dow Jones Industrial Average fell 0.3%, around 100 points, while the S&P 500 lost 0.7% and the Nasdaq Composite 1.1%.
Stocks fell for a second day in a row, with investors continuing to rotate out of high-priced tech stocks: Microsoft and Adobe were down 3.3% and 6.6%, respectively, while electric car maker Tesla dropped nearly 1%.
New inflation data also spooked markets: Wholesale prices increased at the quickest pace on record (going back to 2010) in November, surging 9.6% from a year ago, according to the Labor Department.
Investors will be closely watching updates from the Federal Reserve, meanwhile, with the central bank kicking off its two-day policy meeting on Tuesday.
Most officials—including Fed Chair Jerome Powell—have suggested that the central bank may have to speed up the tapering of its $120 million monthly bond-buying program, which could result in sooner-than-expected interest rate hikes.
Markets also digested more news about omicron, with the World Health Organization warning Tuesday that the new Covid variant is spreading faster than previous versions of the virus.
“Mixed messages continue to reign as the year winds down… Hotter than anticipated PPI has upset the market, especially tech stocks,” says Lindsey Bell, chief money and markets strategist at Ally Invest. “The Fed is more heavily leaning on inflation readings for cues on pace and timing of its monetary unwind,” she adds.
Despite recent market volatility, all three major stock indexes are still not far from record highs. Before Tuesday, the S&P 500 was 1.6% below its intraday peak, while the Dow was 2.5% below its record and the Nasdaq about 5%.
Shares of Apple were down again on Tuesday, falling 0.8% despite a handful of major Wall Street firms upgrading the stock. Bank of America most recently issued a “buy” rating for Apple, predicting that the company’s plans for an augmented reality headset will lead to a major boost in revenue and its share price.
Bank Of America Gets More Bullish On Apple, Says Augmented Reality Plans Will Be A ‘Game-Changer’ (Forbes)
Dow Drops More Than 300 Points Ahead Of Fed Meeting, Tesla Sinks While Pfizer, Moderna Jump (Forbes)