Feb 1 (Reuters) – U.S. stock indexes fell on Wednesday ahead of the Federal Reserve’s decision on interest rates later in the day, while an upbeat outlook from Advanced Micro Devices lifted the chipmaker.
The Fed is widely seen raising its target interest rate by a quarter of a percentage point at its first policy meeting of the year, following a rapid hike in 2022 to curb decades of high inflation.
Currency markets are betting on another 25 basis point (bps) hike in March, and a terminal rate of 4.9% in June.
“It really boils down to a longer-term view beyond this policy meeting and where this peak terminal Fed funds rate will be,” Adam Turnquist, chief technical strategist at LPL Financial.
Recent readings show that inflation is slowing, with the Fed also looking to data that will determine the strength of the labor market and the pace of wage growth.
Meanwhile, data showed US job openings unexpectedly rose in December ahead of the Labor Department’s comprehensive report on nonfarm payrolls for January due on Friday.
In fact, data showed US manufacturing contracting in January as higher interest rates curbed demand for goods.
“It comes down to the narrow line between avoiding a recession and entering a recession. That’s the Fed’s issue as they wrap up their two-day policy meeting today,” Turnquist added.
All three indexes had a strong start to the year, with the S&P (.SPX) and the Dow (.DJI) witnessing their first gains for January since 2019 as investors turned to markets, which were battered last year by a hawkish Fed. .
Advanced Micro Devices Inc (AMD.O) added 8.0% as the semiconductor maker said it expects its business to improve in the second half of the year, supporting the Philadelphia SE Semiconductor index (.SOX), which rose to 1.8%
All 11 major S&P 500 sectors were down, with technology shares (.SPLRCT) falling the least.
Snap Inc (SNAP.N) fell 14.2% after the social media company said it expected current quarter revenue to decline 10%.
Facebook parent Meta Platforms Inc ( META.O ) fell 0.1% before reporting fourth-quarter results after the bell.
At 12:21 pm ET, the Dow Jones Industrial Average (.DJI) was down 381.36 points, or 1.12%, at 33,704.68, the S&P 500 (.SPX) was down 25.69 points, or 0.63%, at 4,050.91. , and the Nasdaq Composite (.IXIC) was down 51.42 points, or 0.44%, at 11,533.13.
Dow component Amgen Inc ( AMGN.O ) fell 4.8% as the drugmaker said its fourth-quarter profit fell slightly, while videogame publisher Electronic Arts Inc ( EA.O ) fell 12.0% to lower its annual booking forecast.
Seventy percent of the 200 companies in the S&P 500 that reported fourth-quarter earnings topped Wall Street expectations. Analysts now see earnings at S&P 500 companies declining 2.4% for the quarter, according to Refinitiv estimates.
Declining issues outnumbered advancing ones for a 1.48-to-1 ratio on the NYSE and for a 1.13-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new lows, while the Nasdaq recorded 75 new highs and 21 new lows.
Reporting by Johann M Cherian and Shreyashi Sanyal in Bengaluru; Additional reporting by Ankika Biswas; Editing by Sriraj Kalluvila and Maju Samuel
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