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Uber rises on upbeat outlook
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Microsoft climbs on AI integration
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Indexes down: Dow 0.17%, S&P 0.52%, Nasdaq 0.91%
(Updates prices, details)
By Johann M Cherian
Feb 8 (Reuters) - U.S. main stock indexes slipped on
Wednesday as comments from certain Federal Reserve officials
exacerbated worries that the central bank will keep hiking
interest rates this year.
New York Federal Reserve President John Williams backed
views of a peak rate of 5.00%-5.25%, higher than what markets
expect, after Fed Chair Jerome Powell acknowledged on Tuesday
that the battle against inflation will take quite a bit of time.
Money market participants are now betting the U.S. central
bank's benchmark rate to rise above 5% in May before peaking to
5.18% by July, levels that officials have backed vociferously. "I could understand the market being weak ... with the Fed
funds futures implying more rate hikes moving forward, compared
with before last Friday and before yesterday's (Powell) speech,"
Thomas Hayes, chairman at Great Hill Capital Llc, said.
Fed Governor Lisa Cook said the U.S. central bank is not yet
done raising rates and even though inflation has shown signs of
moderation, the economy is still running too hot.
Comments from the policymakers come after a strong jobs
report on Friday that stymied expectations of rate cuts any time
this year, and could test the solid start to 2023 for U.S.
equities following last year's battering.
"The market's view is that the Fed may cut rates, but only
by 25 basis points at the end of the year, and the Fed is still
signaling they won't make any cuts this year," said Art Hogan,
chief market strategist at B Riley Wealth in Boston.
In a bright spot, Microsoft Corp rose 1.5% after
the tech giant said it was revamping its Bing search engine and
Edge Web browser with artificial intelligence.
Offsetting Microsoft's gains was Alphabet Inc ,
which was down 7% after its much anticipated AI chatbot Bard
delivered an incorrect answer in an online advertisement.
At 10:40 a.m. ET, the Dow Jones Industrial Average was down 58.20 points, or 0.17%, at 34,098.49, the S&P 500 was down 21.61 points, or 0.52%, at 4,142.39, and the
Nasdaq Composite was down 109.91 points, or 0.91%, at
12,003.88.
Ten of the 11 major S&P 500 sectors fell, with
communications services shares down 3.7%.
President Joe Biden's comments at the State of the Union
address on Tuesday evening that supported calls to tax corporate
share buybacks also weighed on sentiment.
Of all the S&P 500 companies that have reported quarterly
earnings, 69% of them have beaten expectations, according to
Refinitiv. Still, analysts expect quarterly earnings to decline
2.9%.
Activision Blizzard Inc slid 1.6% after UK's
antitrust regulator said Microsoft's purchase of the "Call of
Duty" maker raised competition concerns about cloud and console
gaming.
Uber Technologies Inc rose 0.7% on upbeat earnings
expectations for the year.
Declining issues outnumbered advancers for a 1.86-to-1 ratio
on the NYSE and a 2.05-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and two new
lows, while the Nasdaq recorded 56 new highs and 18 new lows.
(Reporting by Johann M Cherian, Shubham Batra and Shreyashi
Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty and
Shounak Dasgupta)
