© Reuters. FILE PHOTO: Raindrops hang from a Wall Street sign outside the New York Stock Exchange in Manhattan in New York City, New York, US, Oct. 26, 2020. REUTERS/Mike Segar/File Photo
By Shubham Batra and Ankika Biswas
(Reuters) – Wall Street’s major indices fell Monday, with the tech-heavy Nasdaq falling about 1%, after aggressive comments from a US Federal Reserve official dampened hopes the central bank would water down its aggressive monetary policy stance.
Federal Reserve Governor Christopher Waller, a voting member of this year’s interest rate setting committee, said on Sunday that markets should now pay attention to the “end point” of rate hikes, not the pace of each move. and that the end point was probably “a way out”.
The comments follow a softer-than-expected inflation report last week, which had boosted hopes that the Fed could scale back its steep rate hikes and fueled a euphoric market rally.
The previous session posted its largest weekly percentage gain in about five months, as the tech-heavy Nasdaq posted its best week since March.
In the coming week, the focus will be on a slew of economic data, including Wednesday’s retail sales figures, as well as speeches from several Fed officials for further clues on the interest rate outlook.
“The market expects the Fed to continue its aggressive rate rhetoric. That could all change if we get more confirmation about inflation in December,” said Peter Cardillo, chief economist at Spartan Capital Securities.
Traders now expect the Fed to raise rates by half a point in December, and expect a final rate of between 4.75% and 5.0% next year.
At 9:42 a.m. ET, the S&P 500 was down 17.25 points, or 0.43%, to 3,975.68, and down 115.13 points, or 1.02%, to 11,208.20.
It fell 7.84 points, or 0.02%, to 33,740.02. Gains in drug makers including Johnson & Johnson (NYSE:) and Amgen (NASDAQ:) limited declines in the blue-chip index.
As US Treasury yields rose, technology and growth names such as Microsoft Corp (NASDAQ:), Apple Inc (NASDAQ:) and Amazon.com Inc (NASDAQ:) fell between 1% and 3%. [US/]
The S&P 500 information technology sector fell 1.2% and was among the leading sectoral decliners on the benchmark.
Tesla (NASDAQ:) Inc fell 3.4% when Chief Executive Elon Musk said “I have too much work on my plate” when asked about his recent acquisition of Twitter and his leadership of the electric vehicle manufacturer.
Chinese leader Xi Jinping and US President Joe Biden met Monday for long-awaited talks that come as relations between their countries are at their lowest point in decades, marred by disagreements on a host of issues from Taiwan to trade.
Biogen Inc (NASDAQ:) and Eli Lilly (NYSE:) among others, gained 3.4% and 1.4% respectively after the failure of Swiss rival Roche’s drug candidate for Alzheimer’s disease.
Theater operator AMC Entertainment (NYSE:) rose 6.5% as Marvel’s latest film “Black Panther: Wakanda Forever” grossed $330 million worldwide in its opening weekend, while Hasbro Inc (NASDAQ:) fell 7.4% after BofA Global Research cut the toymaker’s stock.
The number of declining issues outpaced the avant-garde with a 2.08-to-1 ratio on the NYSE and a 1.65-to-1 ratio on the Nasdaq.
The S&P index recorded four new highs in 52 weeks and no new lows, while the Nasdaq recorded 23 new highs and 21 new lows.