Nasdaq 100 Suffers Its Biggest Drop in a Month: Markets Wrap
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(Bloomberg) -- US stocks declined on Monday as investors turned cautious going into an eventful week that includes the Federal Reserve’s rate decision and a slew of big-tech earnings.
The Nasdaq 100 suffered its worst day since Dec. 22 while the S&P 500 fell the most since Jan. 18. Declines in Apple Inc. and Microsoft Corp. weighed on both the indexes as investors await earnings from companies including Alphabet Inc. and Meta Platforms Inc. this week.
After the closing bell, NXP Semiconductors NV offered a revenue forecast for the first quarter that missed the average analyst estimate. Whirlpool Corp., meanwhile, said it expects a decline in sales this year.
Treasuries pared earlier declines, with the benchmark 10-year rate around 3.54%. A dollar index rose. Oil fell to its lowest in almost three weeks.
The Fed is widely expected to raise rates by a quarter percentage point on Wednesday, slowing its pace for a second straight session. But traders will be watching for the tone officials set for future meetings. Fed Chair Jerome Powell has continued to push back against traders anticipating rate cuts later this year, emphasizing that he won’t budge until inflation has eased meaningfully. Stocks have still rallied in January, with investors seemingly brushing off Powell’s “higher-for-longer” warning.
“Investors seem to have forgotten the cardinal rule of ‘Don’t Fight the Fed.’ Perhaps this week will serve as a reminder,” a team of Morgan Stanley strategists led by Michael Wilson wrote in a note. Investors adding to the rally in stocks this month will be disappointed if they’re in direct defiance of the Fed, the strategists said.
Citi Global Wealth’s Kristen Bitterly echoed this, saying that January’s rally was technical as it was largely driven by 2022’s “laggards and losers.”
Traders are also awaiting the US jobs report later this week. A less tight labor market is a key goal for the Fed. Investors have also been parsing a slew of earnings reports, with more to come throughout the week. Signs of earnings pressure have been raising concerns about the health of the economy and the outlook for equities.
Read More: Fed’s Wall Street Clash Sets Stage for Powell’s Hawkish Message
“The week ahead will not only be a Fed story, as Friday’s employment situation report will provide clarity on the strength of the labor market to start the new year,” wrote Ben Jeffery and Ian Lyngen of BMO Capital Markets.
The European Central Bank and the Bank of England are also each projected to hike by half a percentage point when they deliver decisions a day after the Fed.
Key events this week:
- China industrial profits, PMIs, Tuesday
- Eurozone GDP, Tuesday
- US Conference Board consumer confidence, Tuesday
- Earnings Tuesday include: UBS, Unicredit, Snap and Advanced Micro Devices
- Eurozone Manufacturing PMI, CPI, unemployment, Wednesday
- US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
- FOMC rate decision, Fed Chair Jerome Powell press conference, Wednesday
- Earnings Wednesday include: Meta Platforms and Peloton Interactive
- Eurozone ECB rate decision, President Christine Lagarde press conference, Thursday
- UK BOE rate decision, Thursday
- US factory orders, initial jobless claims, US durable goods, Thursday
- Earnings Thursday include: Alphabet, Apple, Amazon, Qualcomm and Deutsche Bank and Santander
- Eurozone S&P Global Eurozone Services PMI, PPI, Friday
- US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 1.3% as of 4:01 p.m. New York time
- The Nasdaq 100 fell 2.1%
- The Dow Jones Industrial Average fell 0.8%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.0847
- The British pound fell 0.3% to $1.2349
- The Japanese yen fell 0.4% to 130.46 per dollar
Cryptocurrencies
- Bitcoin fell 4.5% to $22,714.77
- Ether fell 5.4% to $1,554.46
Bonds
- The yield on 10-year Treasuries advanced four basis points to 3.54%
- Germany’s 10-year yield advanced eight basis points to 2.32%
- Britain’s 10-year yield advanced one basis point to 3.34%
Commodities
- West Texas Intermediate crude fell 2.3% to $77.81 a barrel
- Gold futures fell 0.4% to $1,937.80 an ounce
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