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

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 per cent or more lower than its record closing level.

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

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 per cent each.

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

Geopolitical tensions in Ukraine have added to uncertainty, with the US Department of Defense stating that about 8,500 American troops were put on heightened alert.

At 10:06 a.m. ET, the Dow Jones Industrial Average was down 764.89 points, or 2.23 per cent, at 33,599.61, the S&P 500 was down 115.61 points, or 2.62 per cent, at 4,294.52, and the Nasdaq Composite was down 395.35 points, or 2.85 per cent, 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 earnings after market close on Tuesday, followed by Apple and Tesla later this week.

Earnings from S&P 500 companies were expected to grow 24.1 per cent 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 per cent after the industrial conglomerate posted downbeat quarterly revenue.

IBM rose 0.6 per cent after the IT giant beat quarterly Wall Street estimates for revenue and profit, while 3M slipped 2.5 per cent despite beating market estimates for its fourth-quarter results.

American Express jumped 3.4 per cent on upbeat fourth-quarter profit, while another Dow component, Johnson & Johnson, was flat after missing estimates for fourth-quarter revenue.

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 high and two new lows, while the Nasdaq recorded six new highs and 45 new lows.