Feb 6 (Reuters) - The main U.S. stock indexes fell on Monday as investors shifted gears after considering the possibility that the U.S. Federal Reserve may take longer to start cutting rates.
Traders are keeping a close eye on speeches by Fed officials this week, including Chair Jerome Powell on Tuesday, for any change in the central bank's dovish rhetoric after data last week showed services activity was strong in January as well as strong job growth.
U.S. Treasury Secretary Janet Yellen said on Monday the United States may avoid a recession as inflation is coming down while the labor market remains strong.
"As the economy is proving to be more resilient, the odds of recession are dwindling and then there's less of a need for rate hikes or rate cuts, more imminently because of the diminishing odds of a hard landing in the first half of this year," said Jack Janasiewicz, lead portfolio strategist and portfolio manager at Natixis Investment Managers Solutions.
After taking a hit in 2022, U.S. equities have recovered strongly in 2023, led by megacap growth stocks amid short-lived hopes that the Fed will temper its aggressive rate hikes, which in turn could alleviate some pressure on equity valuations.
Money market participants now see the benchmark rate peaking at 5.1% by July, in line with what most policymakers have backed repeatedly.
Yield on the 10-year U.S. Treasury note extended gains to a month's high.
On the corporate side, analysts expect quarterly earnings of S&P 500 firms declining 2.8% in the fourth quarter, according to Refinitiv.
At 2 p.m. EST (1900 GMT), the Dow Jones Industrial Average (.DJI) fell 33.05 points, or 0.1%, to 33,892.96, the S&P 500 (.SPX) lost 21.7 points, or 0.52%, to 4,114.78 and the Nasdaq Composite (.IXIC) dropped 89.69 points, or 0.75%, to 11,917.27.
Tyson Foods Inc (TSN.N) plunged 4.7% after missing analysts' estimates for quarterly revenue and profit.
Miner Newmont Corp (NEM.N) slid 4.8% on its $16.9 billion offer for Australian peer Newcrest Mining Ltd (NCM.AX) to build a global gold behemoth.
Contrary to the overall trend, Tesla Inc (TSLA.O) climbed 3% after a U.S. jury on Friday found Chief Executive Elon Musk and his company were not liable for misleading investors when Musk tweeted in 2018 that he had "funding secured" to take the electric-vehicle maker private.
U.S.-listed Chinese stocks such as Pinduoduo Inc (PDD.O) and Baidu Inc fell 3.1% and 1.0%, respectively, on geopolitical concerns after a U.S. military fighter jet shot down a suspected Chinese spy balloon off the coast of South Carolina on Saturday.
Many of the 11 major S&P 500 sector indexes were in the red, except for consumer discretionary, utilities and consumer staples.
Declining issues outnumbered advancing ones on the NYSE by a 3.88-to-1 ratio; on Nasdaq, a 1.96-to-1 ratio favored decliners.
The S&P 500 posted 5 new 52-week highs and 1 new lows the Nasdaq Composite recorded 72 new highs and 18 new lows.
