Wall Street slips as investors eye Russia, Fed hikes, quarter-end
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[June 27, 2023] By
Sinéad Carew, Sruthi Shankar and Johann M Cherian
(Reuters) - U.S. stocks closed lower on Monday, as investors were wary
of betting on riskier assets before seeing the outcome of Russia's
aborted weekend mutiny.
The rebellion by Russian mercenaries raised questions about President
Vladimir Putin's future. While Putin on Monday thanked mercenary
fighters and commanders who had stood down to avoid bloodshed, the U.S.
State Department said the situation in Russia remained dynamic.
Growth stocks were among the biggest weights on the main indexes, with
Meta Platforms Inc, Alphabet Inc and Tesla Inc all falling sharply.
Last week, U.S. stocks sputtered after a recent rally, with the
tech-heavy Nasdaq snapping its eight-week winning streak after Federal
Reserve Chair Jerome Powell signaled there could be more interest rate
hikes ahead.
"It doesn't feel like the all clear has sounded yet," said Carol Schleif,
chief investment officer at BMO family office in Minneapolis, referring
to Russia. "Nobody knows what the ultimate power structure in Russia's
going to look like."
"Traders are having a tough time today figuring out if they want to be
offensive or defensive so they've got a foot in both camps. They don't
know which way the market's going to swing," she said.
Adding to uncertainty was the start of the second quarter's final week
on Monday, weeks ahead of the financial reporting season. This prompted
profit-taking in growth stocks that had advanced sharply so far this
year, Schleif said.
Investors also checked out underdogs for the year-to-date such as value
stocks and small caps, said Chris Zaccarelli, chief investment officer
at Independent Advisor Alliance, Charlotte, North Carolina.
"Out of favor themes for 2023 are working for today. Maybe in the
absence of a real risk on or risk off day you go bargain hunting,"
Zaccarelli said.
The Dow Jones Industrial Average fell 12.72 points, or 0.04%, to
33,714.71; the S&P 500 lost 19.51 points, or 0.45%, at 4,328.82; and the
Nasdaq Composite dropped 156.74 points, or 1.16%, to 13,335.78.
Leading the benchmark's industry index gainers was the energy sector,
which rallied 2.2% as oil prices rose while investors balanced concerns
about global demand growth against upcoming supply disruptions that
could worsen with political instability in Russia.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., November 15,
2022. REUTERS/Brendan McDermid/File Photo
A slew of economic data including a key inflation gauge, durable
goods and University of Michigan's consumer sentiment index is
expected this week, as well as a speech from Powell which could
throw light on the Fed's rate hike plans.
Most policymakers see at least two more quarter-point rate increases
by year-end, though traders are betting on just one hike in July,
according to CMEGroup's Fedwatch tool.
Among single stocks, Pfizer Inc fell 3.7% after the drugmaker said
it was discontinuing the development of an experimental obesity and
diabetes drug due to elevated liver enzymes in patients in clinical
studies.
Alphabet fell 3.3% after UBS downgraded the stock to "neutral,"
while Tesla sank 6% after Goldman Sachs cut the electric car maker's
rating to "neutral."
Lucid Group rose 1.5% after entering into an agreement with UK's
Aston Martin that will give the electric vehicle maker a 3.7% stake
in the company.
PacWest climbed 4% after private-equity firm Ares Management said it
had acquired a $3.5 billion specialty finance loan portfolio from
the lender.
But Carnival slumped 7.6% after the cruise operator forecast
third-quarter earnings below Wall Street expectations.
Advancing issues outnumbered decliners on the NYSE by a 1.91-to-1
ratio; on Nasdaq, a 1.15-to-1 ratio favored decliners.
The S&P 500 posted 18 new 52-week highs and two new lows; the Nasdaq
Composite recorded 53 new highs and 154 new lows.
On U.S. exchanges 9.28 billion shares changed hands compared with
the 11.62 billion average for the last 20 sessions.
(Reporting by Sinéad Carew in New York, Sruthi Shankar and Johann M
Cherian in Bengaluru; Editing by Shinjini Ganguli and Richard Chang)
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