Stock Market Today: Dow Slides as Fears of Big Fed Hike Run High Ahead of Decision

© Reuters

By Yasin Ebrahim

Investing.com -- The Dow fell Tuesday as an early-day show of strength quickly faded as investors braced for a hawkish surprise from the Federal Reserve following recent signs that elevated inflation will stick around for longer than many had expected.    

The Dow Jones Industrial Average slipped 0.5%, or 151 points, the Nasdaq was up 0.2%, and the S&P 500 fell 0.4%

The Federal Reserve kicked off its two-day meeting on Tuesday. But ahead of the central bank’s rate decision on Wednesday, there have been a late flurry of bets on the Fed delivering a 0.75% rate hike rather than the 0.5% expected.

About 94% of the traders expect the Fed to deliver 0.75% hike on Wednesday, a sharp increase from the 6.9% seen in the prior week, according to Investing.com’s Fed Rate Monitor Tool. The repricing of Fed hikes follows Friday's hotter than expected inflation report.  

Technology stocks attempted to pare some of its losses from a day earlier, but dip-buying action was limited by rising Treasury yields ahead of the Fed decision. The United States 10-Year yield topped 3.45%, a fresh 11-year high.

Big tech, excluding Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN), traded modestly higher, with Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL) up less than 1%.

Oracle (NYSE:ORCL) helped boost sentiment on tech stocks after reporting quarterly results that topped estimates, while guidance touted stronger demand for enterprise software spending.

The full-year guidance “suggests continued strength this coming year—with total cloud revenue expected to grow >30% organically and cloud license and support expected to see growth accelerating and 'could see' double-digit organic growth,” Credit Suisse said in a note.

Twitter (NYSE:TWTR) also bucked the trend lower as reports that Elon Musk will attend an employees' all-hands meeting later this week boosted hopes that the billionaire will follow through on his $44 billion deal to take the social media giant private.

Energy, which was the biggest decliner a day earlier, cut gains to close the day flat after oil prices took a u-turn on reports that President Joe Biden is set to meet with Saudi Crown Prince Mohammed bin Salman.

The meeting fueled hopes that the talks could result in OPEC and its allies to release more barrels of oil to bring some relief to Americans faced with pain at the pump as gas prices top $5 a gallon or more.    

Defensive sectors of the market including consumer staples and utilities, which often serve as bond proxies, were the biggest decliners on the day under pressure from rising Treasury yields.

Clorox Co (NYSE:CLX) and Procter & Gamble (NYSE:PG) fell more than 3%, while American Water Works (NYSE:AWK) and Pinnacle West Capital Corp (NYSE:PNW) were down more than 5% and 4%, respectively.

Crypto-related stocks show little sign of staging a comeback after Coinbase (NASDAQ:COIN) saying it would slash 18% of its workforce flagged worries of a recession and crypto winter amid a rout in cryptocurrencies including Bitcoin.

In other news, FedEx Corporation (NYSE:FDX) jumped more than 14% after raising its dividend by more than 50%.