12.05pm: Nasdaq bares brunt of session selloff
US stocks fell in noon trading on investor jitters ahead of some Big Tech earnings and the mid-week Federal Reserve rate decision.
At midday, the Dow lost 62 points to 33,916, while the S&P 500 eased 28 points at 4,043 and the tech-heavy Nasdaq slipped 138 points to 11,484.
“While there have been several positive developments, we think the good news is now priced, and reality is likely to return with month end and the Fed’s resolve to tame inflation,” Morgan Stanley chief US equity strategist Mike Wilson wrote in a note to clients.
Notable movers included shares of Ford Motor Company, which declined nearly 2% after the automaker announced it is slashing prices but ramping up production for its electric Mustang Mach-E crossover.
9.35am: Can the Fed live up to expectations?
US stocks have started what is set to be an eventful trading week in the red, with investors looking ahead to a slew of interest rate decisions from around the world, US payrolls data, and corporate earnings from the likes of Amazon, Apple, Alphabet, and Meta.
Just after the market opened, the Nasdaq Composite had shed 110 points or 0.9% at 11,512 points, the S&P 500 was down 25 points or 0.6% at 4,045 points, and the Dow Jones Industrial Average was down 103 points or 0.3% at 33,875 points.
Forex.com market analyst Fiona Cincotta noted that the Nasdaq was leading the charge lower as investors questioned, with so much good news priced in, whether the Fed’s latest interest rate move would live up to expectations.
“Stocks have risen sharply across the start of the year, particularly the growth stocks, as investors price in a less aggressive US central bank and rate cuts later in the year,” Cincotta said.
“With this in mind, the risk is a hawkish-sounding Powell, and with inflation still over three times to target 2% level, a hawkish-sounding Fed seems more like wishful thinking right now. While price pressure has eased, there is still work to be done.”
6.30am: Busy week for central banks
Wall Street is expected to open lower as the market prepares for a raft of interest rate decisions from the US Federal Reserve, the European Central Bank and the Bank of England in a week that culminates with the all-important US payrolls data and as earnings season continues.
Futures for the Dow Jones Industrial Average (DJIA) declined 0.6% in Monday pre-market trading, while those for the broader S&P 500 index dropped 0.9%, and contracts for the Nasdaq-100 fell 1.2%.
The major US indexes all finished in positive territory on Friday, with the DJIA gaining 0.1% to close at 33,978, the S&P 500 increasing 0.3% to 4,071, and the Nasdaq Composite up 1% at 11,622 to cap off a great week for the tech-laden index.
“Leading into this week and indeed the end of January, there has been a groundswell of optimism based on hopes that inflation has peaked and that central banks will therefore cut their cloth accordingly,” commented Richard Hunter, head of markets at interactive investor.
“This optimism will face several stern tests in a particularly busy week. Interest rate decisions are due from the ECB and the Bank of England as well as the Fed, where a 0.25% hike is all but priced in,” he added.
Hunter noted that the US non-farm payrolls report on Friday is currently expected to show that 175,000 jobs were added in January, compared to 223,000 the previous month. While there have been any number of economic releases pointing to the desired economic slowdown in the US, he said the jobs market seems to be the main area which is resisting a slowdown and the report, therefore, assumes added significance.
“Alongside the slew of economic data, the reporting season continues apace, with updates from the likes of General Motors, Ford, Starbucks, Pfizer and McDonald’s providing further colour to the state of the economy on the ground,” Hunter added. “In addition, the initial strength of the Nasdaq will also come under scrutiny, with reports due from Apple, Amazon, Alphabet and Meta Platforms.”