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Wall Street closed sharply lower in a choppy session on Wednesday, dragged down by mega-cap tech stocks. Comments coming in from various Fed officials indicated that a moderate regime of interest rate hikes was likely to continue through 2023. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.6% or 207.68 points to close at 33,949.01. Twenty-three components of the 30-stock index ended in negative territory, while seven ended in positive.
The S&P 500 fell 1.1% or 46.14 points to close at 4,117.86. All of the 11 broad sectors of the benchmark index ended in negative territory. The Communication Services Select Sector SPDR (XLC), the Utilities Select Sector SPDR (XLU) and the Technology Select Sector SPDR (XLK) slid 3.1%, 1.7% and 1.2%, respectively.
The tech-heavy Nasdaq dropped 1.7% or 203.27 points to finish at 11,910.52.
The fear-gauge CBOE Volatility Index (VIX) was up 5.2% to 19.63. A total of 10.6 billion shares were traded on Wednesday, lower than the last 20-session average of 11.9 million. Decliners outnumbered advancers on the NYSE by a 2.07-to-1 ratio. On the Nasdaq, a 2.21-to-1 ratio favored declining issues.
Fed Officials Say Rate Hikes Will Continue
On Wednesday, various Fed officials went on record saying that more interest rate rises can be expected from the central bank as it presses forward with its efforts to cool inflation. However, in line with Fed Chair Jerome Powell’s comments made after the Fed FOMC meet, they stopped short of suggesting that January's stronger-than-expected jobs report could push them back to a more aggressive monetary policy stance.
Calling a federal funds rate of between 5.00% and 5.25% "a very reasonable view of what we'll need to do this year in order to get the supply and demand imbalances down," New York Fed President John Williams added that the Fed would probably be able to take "smaller steps" this year, in comparison to the stringent measures taken in 2022.
Fed Governor Lisa Cook, in another event, said, “it is appropriate to move in smaller steps while we assess the effects of our cumulative tightening in the economy and inflation." She also expressed her optimism about the jobs report, mentioning that continued strength in the labor market indicated that the central bank might successfully achieve a soft landing of the economy while bringing down inflation to its target rate of 2%.
Another Fed Governor, Christopher Waller, however, was more pensive in his remarks. At an Arkansas State University conference, he acknowledged signs of moderating food, energy, and shelter prices this year and that the Fed's rapid increases in interest rates has begun "to pay off." Waller added that he is not seeing a quick enough decline in economic data, and that he expects a longer fight. Although wage growth has slowed, the decline is "not enough," Waller said. "The Fed will need to keep a tight stance of monetary policy for some time."
With clear signals emerging from Fed officials that rate hikes are poised to continue, albeit at a moderate pace, markets gave up most of the gains made on Tuesday, and tech and utility stocks were the worst hit.
Google Becomes a Massive Drag on the Market
Alphabet Inc. (GOOGL - Free Report) nosedived, losing $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video.
Google shares slid 7.7% and became the biggest drag on the S&P 500 and Nasdaq. It also contributed to a broader tech rout.
Per a government report, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week. The previous week had seen an increase of 4.1 million barrels.
The U.S. Census Bureau reported that wholesale inventories, after adjustment for seasonal variations and trading-day differences, but not for price changes, were $932.9 billion at the end of December, up 0.1% from the November level. The November number was revised down to 0.9% from the previously reported 1%.
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Stock Market News for Feb 9, 2023
Wall Street closed sharply lower in a choppy session on Wednesday, dragged down by mega-cap tech stocks. Comments coming in from various Fed officials indicated that a moderate regime of interest rate hikes was likely to continue through 2023. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.6% or 207.68 points to close at 33,949.01. Twenty-three components of the 30-stock index ended in negative territory, while seven ended in positive.
The S&P 500 fell 1.1% or 46.14 points to close at 4,117.86. All of the 11 broad sectors of the benchmark index ended in negative territory. The Communication Services Select Sector SPDR (XLC), the Utilities Select Sector SPDR (XLU) and the Technology Select Sector SPDR (XLK) slid 3.1%, 1.7% and 1.2%, respectively.
The tech-heavy Nasdaq dropped 1.7% or 203.27 points to finish at 11,910.52.
The fear-gauge CBOE Volatility Index (VIX) was up 5.2% to 19.63. A total of 10.6 billion shares were traded on Wednesday, lower than the last 20-session average of 11.9 million. Decliners outnumbered advancers on the NYSE by a 2.07-to-1 ratio. On the Nasdaq, a 2.21-to-1 ratio favored declining issues.
Fed Officials Say Rate Hikes Will Continue
On Wednesday, various Fed officials went on record saying that more interest rate rises can be expected from the central bank as it presses forward with its efforts to cool inflation. However, in line with Fed Chair Jerome Powell’s comments made after the Fed FOMC meet, they stopped short of suggesting that January's stronger-than-expected jobs report could push them back to a more aggressive monetary policy stance.
Calling a federal funds rate of between 5.00% and 5.25% "a very reasonable view of what we'll need to do this year in order to get the supply and demand imbalances down," New York Fed President John Williams added that the Fed would probably be able to take "smaller steps" this year, in comparison to the stringent measures taken in 2022.
Fed Governor Lisa Cook, in another event, said, “it is appropriate to move in smaller steps while we assess the effects of our cumulative tightening in the economy and inflation." She also expressed her optimism about the jobs report, mentioning that continued strength in the labor market indicated that the central bank might successfully achieve a soft landing of the economy while bringing down inflation to its target rate of 2%.
Another Fed Governor, Christopher Waller, however, was more pensive in his remarks. At an Arkansas State University conference, he acknowledged signs of moderating food, energy, and shelter prices this year and that the Fed's rapid increases in interest rates has begun "to pay off." Waller added that he is not seeing a quick enough decline in economic data, and that he expects a longer fight. Although wage growth has slowed, the decline is "not enough," Waller said. "The Fed will need to keep a tight stance of monetary policy for some time."
With clear signals emerging from Fed officials that rate hikes are poised to continue, albeit at a moderate pace, markets gave up most of the gains made on Tuesday, and tech and utility stocks were the worst hit.
Google Becomes a Massive Drag on the Market
Alphabet Inc. (GOOGL - Free Report) nosedived, losing $100 billion in market value on Wednesday after its new chatbot shared inaccurate information in a promotional video.
Google shares slid 7.7% and became the biggest drag on the S&P 500 and Nasdaq. It also contributed to a broader tech rout.
Consequently, shares of Zoom Video Communications, Inc. (ZM - Free Report) and Meta Platforms, Inc. (META - Free Report) fell 6.3% and 4.3%, respectively. Both carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
Per a government report, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.4 million barrels from the previous week. The previous week had seen an increase of 4.1 million barrels.
The U.S. Census Bureau reported that wholesale inventories, after adjustment for seasonal variations and trading-day differences, but not for price changes, were $932.9 billion at the end of December, up 0.1% from the November level. The November number was revised down to 0.9% from the previously reported 1%.