NEW YORK: S&P 500 and Nasdaq gave up early gains to drop on Wednesday as technology stocks reversed course, while investors awaited inflation data and the Federal Reserve’s policy meeting next week.
Major technology and growth stocks fell between 0.1% and 3.1%, barring Netlfix and Tesla, which rose 1.1% and 1.8%, respectively. More than half of the S&P sub-sectors declined, led by communication services that lost 1.4%.
Inflation data in the US is expected to show consumer prices cooled slightly on a month-over-month basis in May but core prices are likely to have remained elevated.
Pressuring stocks, the two-year US Treasury yield and the benchmark 10-year yield climbed after the Bank of Canada raised interest rates, adding to market apprehension around the Fed’s interest rate decision.
Money market participants now see a 69% chance that the US central bank will skip raising interest rate in its June meeting but will hike in July, down from nearly 77% earlier, according to the CME’s Fedwatch tool.
US shares have recently been boosted by a rally in megacap stocks and a stronger-than-expected earnings season, with the S&P 500 up almost 20% from its October 2022 lows.
The fall on Wednesday is reflective of a lack of confidence in investors over the sustainability of the rally, as it is dependent on a small concentration of major names, said Peter Andersen, founder of Andersen Capital Management. Some analysts say that big tech and other major growth stocks could soon see some profit-taking.
Meanwhile, CBOE Volatility Index hit the lowest since February 14, 2020. Wells Fargo raised the price target on Netflix shares to $500 from $400 per share, the highest on Wall Street, according to Refinitiv.
Energy index rose 2.5% after oil prices edged higher, while the KBW Regional Banking Index hit a 2-month high. At 11:59 a.m. ET, the Dow Jones Industrial Average was up 14.33 points, or 0.04%, at 33,587.61, the S&P 500 was down 12.17 points, or 0.28%, at 4,271.68, and the Nasdaq Composite was down 97.80 points, or 0.74%, at 13,178.62.
Among other stocks, Yext Inc soared 36.1% after the New York-based online marketing firm raised its annual earnings forecast. Campbell Soup fell 6.3% after the packaged food maker posted lower third-quarter gross margin, dented by high commodity and freight costs.
Coinbase shares rose 2.2% after hitting a seven-month low on Tuesday as the Securities and Exchange Commission sued the largest US crypto exchange, accusing it of operating illegally, without having first registered with regulator.