Tech, megacaps drag Wall St to lower close as big market week kicks off
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[January 31, 2023] By
Lewis Krauskopf, Shreyashi Sanyal and Johann M Cherian
NEW YORK (Reuters) - Major U.S. stock indexes sank on Monday, weighed
down by declines in technology and other megacap shares, as investors
looked toward a major week of events including central bank meetings and
a slew of earnings reports.
The heavyweight tech sector dropped 1.9% while energy shed 2.3%, the
biggest drop among the S&P 500 sectors. Shares of Apple Inc, Amazon.com
Inc and Google parent Alphabet Inc, which are due to post results later
this week, all slumped.
More than 100 S&P 500 companies are expected to report results this
week, which also includes central bank meetings in the United States and
Europe and closely watched U.S. employment data.
“The market has had a big run and the trading is a bit more cautious
heading into a week which likely will be an inflection point for the
overall market,” said Keith Lerner, co-chief investment officer at
Truist Advisory Services.
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The Dow Jones Industrial Average fell 260.99 points, or 0.77%, to
33,717.09, the S&P 500 lost 52.79 points, or 1.30%, to 4,017.77 and the
Nasdaq Composite dropped 227.90 points, or 1.96%, to 11,393.81.
U.S. Treasury yields rose, providing another pressure point for tech
shares that have otherwise rebounded to start the year after a rough
2022.
Despite Monday's declines, the S&P 500 remained on track to post its
biggest January gain since 2019.
The U.S. central bank is seen hiking the Fed funds rate by 25 basis
points at the end of its two-day policy meeting on Wednesday, following
a 2022 in which the Fed aggressively boosted rates to control soaring
inflation.
Fed Chair Jerome Powell's news conference will be scrutinized for
whether the rate-hiking cycle may be coming to a close and for signs of
how long rates could stay elevated.
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Traders work on the trading floor at the
New York Stock Exchange (NYSE) in New York City, U.S., January 27,
2023. REUTERS/Andrew Kelly
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“It’s probably one of the most important meetings since the whole
thing began," said Sameer Samana, senior global market strategist at
Wells Fargo Investment Institute. "Unless the Fed extends that
timeline meaningfully from what the market expects, which is that
the Fed will be done in the next meeting or two, this may end up
marking the pause, so to speak.”
Meanwhile, the European Central Bank is expected to deliver another
large rate hike on Thursday.
Investors are also focused on earnings reports, amid concerns the
economy may be facing a recession. With more than 140 companies
having reported so far, S&P 500 earnings are expected to have fallen
3% in the fourth quarter compared with the prior-year period,
according to Refinitiv IBES.
In company news, shares of Johnson & Johnson fell 3.7% after the
healthcare giant's strategy to use bankruptcy to resolve the
multibillion-dollar litigation over claims its talc products cause
cancer was rejected by a federal appeals court.
Declining issues outnumbered advancing ones on the NYSE by a
2.40-to-1 ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners.
The S&P 500 posted 5 new 52-week highs and no new lows; the Nasdaq
Composite recorded 67 new highs and 20 new lows.
About 10.6 billion shares changed hands in U.S. exchanges, compared
with the 11.2 billion daily average over the last 20 sessions.
(Reporting by Lewis Krauskopf in New York, and Shreyashi Sanyal and
Johann M Cherian in Bengaluru; Editing by Anil D'Silva and Matthew
Lewis)
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