Wall St slides over 2% as tech rout deepens; Fed meeting eyed

  • American Express rises on strong results
  • Johnson and Johnson, GE drop after missing estimates
  • Indexes down: Dow 2.2%, S&P 2.6%, Nasdaq 2.9%

Jan 25 (Reuters) – US stock indexes slid on Tuesday, with the S&P 500 on track to confirm a correction as a selloff in technology stocks ahead of the Federal Reserve’s policy meeting overshadowed upbeat results from blue-chip companies including IBM and 3M.

The benchmark index came close to confirming a correction on Monday before bouncing back late in the session. A correction is confirmed when an index closes 10% or more lower than its record closing level.

US equities have had a turbulent start to 2022, with the S&P 500 (.SPX) now down 10.4% from its record closing high on Jan. 3, while the tech-heavy Nasdaq (.IXIC) tracked its worst start to the year since 1980.

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The Fed will convene its two-day monetary policy meeting later in the day, which will be watched closely for cues on the central bank’s timeline for hiking key interest rates to combat inflation.

Fed funds futures traders are pricing in a 25 basis points hike in March, in addition to three more rate increases by the end of the year.

All of the 11 major S&P 500 sectors declined in early trading, with eight of them down more than 2% each.

“It just looks like the market is reacting to new reality of tighter policy from the Fed … you probably do not see anybody take any huge bets ahead of that meeting on Wednesday,” said Dan Eye, chief investment officer at Fort Pitt Capital Group.

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At 10:06 am ET, the Dow Jones Industrial Average (.DJI) was down 764.89 points, or 2.23%, at 33,599.61, the S&P 500 (.SPX) was down 115.61 points, or 2.62%, at 4,294.52, and the Nasdaq Composite (.IXIC) was down 395.35 points, or 2.85%, at 13,459.78.

The fourth-quarter earnings season has started off on a mixed note, with all eyes now on mega-cap growth company Microsoft’s (MSFT.O) earnings after market close on Tuesday, followed by Apple (AAPL.O) and Tesla (TSLA). O) later this week. read more

Earnings from S&P 500 companies were expected to grow 24.1% year-over-year, according to IBES estimates from Refinitiv.

“Q4 earnings are certainly good, but they’re more in line with expectations compared to the huge beats that we’ve seen over the last four quarters,” added Eye.

General Electric Co fell 8.4% after the industrial conglomerate posted downbeat quarterly revenue. read more

IBM (IBM.N) rose 0.6% after the IT giant beat quarterly Wall Street estimates for revenue and profit, while 3M (MMM.N) slipped 2.5% despite beating market estimates for its fourth-quarter results. read more

American Express (AXP.N) jumped 3.4% on upbeat fourth-quarter profit, while another Dow component, Johnson & Johnson (JNJ.N), was flat after missing estimates for fourth-quarter revenue. read more

Declining issues outnumbered advancers for a 6.86-to-1 ratio on the NYSE and for a 4.07-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and two new lows, while the Nasdaq recorded six new highs and 45 new lows.

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Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.

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