Aug 20 (Reuters) - Wall Street's main indexes fell on Wednesday, with a selloff in tech stocks driving the Nasdaq to a two-week low as caution prevailed ahead of the Federal Reserve's highly anticipated Jackson Hole symposium this week.
After driving much of the market's recovery from the April selloff, tech stocks are pulling back as investors reassess high valuations.
The S&P 500 technology index (.SPLRCT), slid 1.1% on the day.
"We're seeing more downside in the names that have run the most over the last four months, in tech in particular, and maybe a little bit of profit taking in anticipation of more data on the economy and more guidance from the Fed," said Jim Baird, chief investment officer at Plante Moran.
Analysts listing other factors behind the tech sell-off mentioned OpenAI CEO Sam Altman's comments last week about artificial intelligence stocks being "in a bubble," and a Massachusetts Institute of Technology study that showed many tech companies were struggling to translate AI into actual profits.
Some investors also worried about government interference in the private sector. President Donald Trump's administration is looking into taking equity stakes in chip firms such as Intel (INTC.O), opens new tab, weeks after unprecedented revenue-sharing deals with Nvidia and AMD.
Nvidia (NVDA.O), slid 1.2% and Advanced Micro Devices (AMD.O), fell 2%, while Intel (INTC.O), and Micron (MU.O), fell between 7% and 5.3%. Nvidia's quarterly results on August 27 are keenly awaited for clues on demand for artificial intelligence.
Other megacap growth names such as Apple and Meta (META.O), also came under pressure, falling 1.8% and 0.9%, respectively.
"It's much more about profit-taking and temporary rebalance here," said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management in New York.
"If you get a Federal Reserve (interest rate) cut or a mention of it on Friday, this will reverse pretty quickly, but this is a lot to do with names pushed up to really lofty levels."
At 1:55 p.m. the Dow Jones Industrial Average (.DJI), rose 9.10 points, or 0.02%, to 44,931.37, the S&P 500 (.SPX), lost 23.18 points, or 0.36%, to 6,388.19 and the Nasdaq Composite (.IXIC), lost 182.28 points, or 0.85%, to 21,132.67.
The Nasdaq was on track for its biggest two-day drop since April, when U.S. tariff announcements had rattled global financial markets.
Minutes from the Fed's July meeting, where interest rates were left unchanged, showed almost all policymakers viewed it as appropriate to maintain the target range for the federal funds rate at 4.25% to 4.50%, despite two dissenters.
Remarks from Atlanta Fed President Raphael Bostic are expected on Wednesday afternoon.
The central bank's annual conference in Jackson Hole, Wyoming, kicks off on Friday, with Chair Jerome Powell expected to speak, remarks that will be closely watched for policy signals. Investors have been pricing in a 25-basis-point rate cut in September, according to data compiled by LSEG.
Meanwhile, investors also monitored Trump's call for the resignation of Fed Governor Lisa Cook, with the president citing allegations that she was involved in mortgage fraud.
Earnings from big retailers, seen as a barometer for the health of the American consumer, are also due this week as sentiment has taken a hit from concerns that tariffs could drive prices higher.
Target (TGT.N), tumbled 6.6% after the company named a new CEO and retained its annual forecasts that were lowered in May.
Cosmetics giant Estee Lauder (EL.N), fell 5.3% after tariff-related headwinds weighed on its annual profit forecast.
Declining issues outnumbered advancers by a 1.06-to-1 ratio on the NYSE. There were 125 new highs and 55 new lows on the NYSE.
The S&P 500 posted 21 new 52-week highs and no new lows while the Nasdaq Composite recorded 31 new highs and 110 new lows.
Reporting by Carolina Mandl, in New York, Johann M Cherian and Sanchayaita Roy in Bengaluru; Editing by Devika Syamnath and David Gregorio
