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Wall St closes down, Fed speakers put rate hikes in focus

EconomyJan 13, 2022 06:41PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 12, 2022. REUTERS/Brendan McDermid

By Sinéad Carew

(Reuters) - Wall Street's major indexes closed lower on Thursday with Nasdaq's 2.5% drop leading the losses as investors took profits, particularly in technology stocks after a three-day rally, while multiple Federal Reserve officials were out talking about inflation and interest rate hikes.

Interest-rate sensitive growth stocks such as technology lagged the broader market in the last session before the fourth-quarter earnings season starts in earnest. The S&P's technology index fell 2.7% while consumer discretionary fell 2%.

Several Fed officials spoke publicly about battling high inflation with Lael Brainard the latest, and most senior, U.S. central banker signaling that the Fed was getting ready to start raising rates in March.

Other officials, including Chicago Fed President Charles Evans, talked about the need for tighter policy while Philadelphia Fed President Patrick Harker also discussed a March rate hike after San Francisco Fed President Mary Daly had mentioned a March lift-off late on Wednesday.

"When Brainard says we've got to do something, they're going do something," said Brad McMillan, chief investment officer for Commonwealth Financial Network, an independent broker-dealer in Waltham, Mass. He said Brainard's comments were particularly striking coming from one of the Fed's most dovish officials.

"There doesn’t seem to be much debate left within the Fed about what direction they’re going, and not even much about how fast they should get there," he added.

The Dow Jones Industrial Average fell 176.7 points, or 0.49%, to 36,113.62, the S&P 500 lost 67.32 points, or 1.42%, to 4,659.03 and the Nasdaq Composite dropped 381.58 points to 14,806.81.

Nasdaq's decline its biggest one-day percentage loss since Jan. 5 when it fell 3.4% in a single session after hawkish Fed minutes were released for the December meeting. It did not help that Thursday's rate hike talk had followed the technology-laden Nasdaq's 1.7% advance in this week's first three sessions.

Even though U.S. Treasury 10-year yields fell on Thursday, investors focused on profit taking, said Sameer Samana, senior global market strategist at Wells Fargo (NYSE:WFC) Investment Institute in St. Louis.

"We had a pretty nice rebound in the Nasdaq the last few days, so there might just be some lingering nervousness around rates the Fed and some profit taking, especially ahead of earnings," said the strategist.

Samana described Brainard's comments as "a psychological hit to those hoping that there was some dissent to starting rate hikes sooner rather than later."

Wells Fargo followed Goldman Sachs (NYSE:GS), JPMorgan and Deutsche Bank (DE:DBKGn) in forecasting that the Fed might raise interest rates four times this year.

Adding some anxiety for investors, U.S. companies are due to report results on the final quarter of 2021 in the coming weeks with banks JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo set to start the ball rolling on Friday, while big technology companies report next week.

Year-over-year earnings growth from S&P 500 companies were expected to be lower in the fourth quarter compared with the first three quarters but still strong at 22.4%, according to IBES data from Refinitiv.

Retail investors have also raised their exposure to bank stocks ahead of the earnings announcements, according to Vanda (NASDAQ:VNDA) Research's weekly report on retail flows.

Delta Air Lines (NYSE:DAL) closed up 2% at $41.47 after beating estimates for fourth-quarter earnings. Its chief executive also predicted a swift recovery from turbulence caused by the Omicron coronavirus variant, also helping to lift the S&P 1500 Airlines index 2.6% for the day.

Earlier Data showed the producer price index (PPI) rose 0.2% last month after advancing 0.8% in November while in the 12 months through December, the PPI rose 9.7% versus the 9.8% forecast of economists polled by Reuters.

The PPI figures come a day after Wall Street indexes cheered consumer inflation numbers that hit a 40-year high but largely met market expectations.

Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 2.24-to-1 ratio favored decliners.

The S&P 500 posted 44 new 52-week highs and no new lows; the Nasdaq Composite recorded 75 new highs and 360 new lows.

On U.S. exchanges 10.43 billion shares changed hands compared with the 10.39 billion average over the last 20 sessions.

Wall St closes down, Fed speakers put rate hikes in focus
 

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Comments (17)
mark twain
mark twain Jan 14, 2022 5:18AM ET
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Wall St closes down for good. So does the Fed. People go back to real economy.
Chad RicherThanYou
Chad RicherThanYou Jan 13, 2022 3:15PM ET
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Biblical crash coming. Biggest of all time. 401ks to be wiped out
Daniel Hammond
Daniel Hammond Jan 13, 2022 3:15PM ET
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Probably not this is normal before the first rate hike.
Mox Mox
Mox Mox Jan 13, 2022 3:15PM ET
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Chad the doomer. eventually you will be right. maybe this year, maybe the next maybe in 15
Brian Bolander
Brian Bolander Jan 13, 2022 3:15PM ET
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lol
Todd Holaday
Todd Holaday Jan 13, 2022 3:15PM ET
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I dont recall any market crashes in the Bible.
Roy Nisani
Roy Nisani Jan 13, 2022 2:59PM ET
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run sell hide ! lol
Robert Palumbo
Robert Palumbo Jan 13, 2022 2:58PM ET
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Non-stop liberal market manipulation it started the day Biden got in and hasn't stopped since
Mitchel Pioneer
Mitchel Pioneer Jan 13, 2022 2:56PM ET
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More divine intervention, as the DOW miraculously rises from they abyss once again.  Who are these "buyers" that wait to rush in every time the market goes red?  Guess we just can't have a DOW loss in the biggest investment JOKE in the world.
Stefan Kunco
Stefan Kunco Jan 13, 2022 2:49PM ET
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Tomorrow omicron inflation &next week inflation and omicron &again, again ,again. For last year only negative information.
Ayumastura PinkLady
Ayumastura PinkLady Jan 13, 2022 2:47PM ET
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why this article come out with 3 different headlines in 3 different time as if it is the latest news? are u lazy to think and write new article?
Zebra Lo
Zebra Lo Jan 13, 2022 2:47PM ET
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different sentiments needed to manipulate the market
Mitchel Pioneer
Mitchel Pioneer Jan 13, 2022 2:05PM ET
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Time for the criminal, "late day" round of fraud?
Wilks Campbell
Wilks Campbell Jan 13, 2022 1:31PM ET
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They are talking the supply side glitch is easing, but the true picture I am seeing still lots of people not going to work, major reason is they got the covid, if omicron or other-crons has not peaked yet, I dont know what justify them saying the supply glitch has peaked. People say everything to manipulate the market , what a greedy world!
Mitchel Pioneer
Mitchel Pioneer Jan 13, 2022 1:21PM ET
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Once again, the DOW magically reverses the second it turns red.  What an absolute joke.  This laughable "market" is teeming with fraud and criminal manipulation.
Xoli Ncube
Xoli Ncube Jan 13, 2022 1:21PM ET
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True that brother....only us day traders will suffer ..swing traders they just apply patience they don't see this manipulation...
Zainudin Harun
Zainudin Harun Jan 13, 2022 1:06PM ET
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whats next
Bulls MakeMore
Bulls MakeMore Jan 13, 2022 12:51PM ET
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Dash for trash continues
Jeremy Johnson
Jeremy Johnson Jan 13, 2022 12:46PM ET
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Anyone know why everything is sell off?
Bulls MakeMore
Bulls MakeMore Jan 13, 2022 12:46PM ET
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Fear of the Fed continues...long term investors can ignore it and buy top stocks on sale.
Alan Rice
Alan Rice Jan 13, 2022 12:46PM ET
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yup.
Jeremy Johnson
Jeremy Johnson Jan 13, 2022 12:46PM ET
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Bulls MakeMore  the commodities are also selling off, too.
Stan Smith
Stan Smith Jan 13, 2022 12:34PM ET
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phew.. inflation. poor economic and job data have all disappeared ..lol
Alan Rice
Alan Rice Jan 13, 2022 12:34PM ET
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About time, huh ??
Best Videos
Best Videos Jan 13, 2022 12:34PM ET
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please someone here told me what i will do to get money in platform iq option or like this because i need it thanks for everybody
Frederick Chotsky
Chotsky Jan 13, 2022 9:53AM ET
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.. and yet, yields are up on 3, 10 and 30 years bonds. In other words, equities are up, and the reporters at Reuters have no idea why.
Ron Love
Ron Love Jan 13, 2022 9:53AM ET
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I mean, seems to be simple rotation to DOW today off the data. 🤷‍♂️
Chris Johnson
Chris Johnson Jan 13, 2022 9:41AM ET
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So these numbers should make FED to reverse their decision about rate hikes? Is that the take?
Ron Love
Ron Love Jan 13, 2022 9:41AM ET
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No, but probably pushes back QT a few months if inflation has peaked.
 
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