Wall Street stocks declined on Wednesday as weakness in Apple Inc. shares added to fears about sticky inflation and interest rates remaining higher for longer, which were fanned by stronger-than-expected services sector data.
The Institute for Supply Management (ISM) said on Wednesday that its non-manufacturing Purchasing Managers’ Index improved last month to 54.5 from 52.5 as expected, while a measure of the prices paid by service-sector enterprises for inputs increased.
The CME FedWatch Tool revealed that 91% of traders were betting that the Federal Reserve would stop raising interest rates at its meeting on September 19–20, while only 46.8% of traders were betting on a pause in November, down from nearly 57% before the data.
According to Carol Schleif, chief investment officer at BMO’s family office in Minneapolis, “the stronger-than-expected ISM services data shows that investors are still not very skilled at reading the post-pandemic tea leaves.”
The numbers, according to Schleif, reveal a healthy economy and inflation that is not declining “as quickly as the Fed would need to start cutting rates any time in the foreseeable future,” despite investors’ hopes for interest rate reductions soon.
Susan Collins, president of the Boston Fed, emphasised the need for the central bank to “proceed carefully” with its upcoming monetary policy actions earlier in the day.
To reach 34,406.42, the Dow Jones Industrial Average dropped 235.55 points, or 0.68%. The Nasdaq Composite fell 179.32 points, or 1.28%, to 13,841.63 and the S&P 500 sank 40.09 points, or 0.89%, to 4,456.74.
The greatest decliner among the S&P 500’s 11 major industry sectors was technology, which fell 1.6%. The only sector to increase was defensive utilities, up 0.1%.
Following news that China had prohibited officials at central government organisations from using iPhones and other foreign-branded smartphones for work, Apple was the greatest drag on the three major indices, falling 3.7%.
Tesla, Amazon.com, and Nvidia all experienced declines of 1.6% to 3.8%, while rates on the 10-year and two-year U.S. Treasuries increased as a result of the economic data. Other large-cap stocks also experienced a decrease.
A week before the eagerly anticipated August inflation statistics and the Fed’s rate decision on September 20, the “Beige Book” snapshot of the U.S. economy was provided by the Fed. The S&P 500 scarcely responded to it.
The report indicated “modest” recent U.S. economic growth, “subdued” job growth, and generally slower inflation across the board.
Oil prices have recently increased, which has fueled worries about lingering inflationary pressures that could force the Federal Reserve to keep its aggressive position on interest rates.
After the American weapons manufacturer reduced the expected delivery date for its F-35 planes, Lockheed Martin’s stock fell 4.5%.
After the video-streaming business announced it would limit new hiring and reduce its personnel by around 10%, Roku rose 1.9%.
On the NYSE, decliners outnumbered advancers by a ratio of 2.38 to 1; on the Nasdaq, the ratio was 2.10 to 1.
The Nasdaq Composite registered 33 new highs and 146 new lows, while the S&P 500 posted 3 new 52-week highs and 25 new lows. (Reporting from Bengaluru by Amruta Khandekar, Shristi Achar, and Sinéad Carew in New York Vinay Dwivedi and Richard Chang’s editing