The S&P 500 and the Nasdaq slipped on Monday, adding to the market’s recent string of losses, on worries that rising U.S. interest rates will hurt economic growth, while Tesla’s shares struggled after a poll called for Elon Musk to quit as Twitter’s CEO.
Shares of the electric-car maker TSLA.O edged down 1% following strong premarket gains in the wake of a Twitter poll that showed majority of users voted for Elon Musk to step down as chief executive of the social media platform.
The benchmark S&P 500 .SPX and the tech-heavy Nasdaq .IXIC lost over 2% each last week after Fed Chair Jerome Powell signaled more policy tightening, and the central bank projected that interest rates would top the 5% mark in 2023, a level not seen since 2007.
“There’s residual negativity from the Fed’s more hawkish comments, concerns about where interest rates are going to end up next year and what that is going to do to valuations,” Michael James, senior vice president of institutional equity trading at Wedbush Securities.
“When people adjust their expectations after the Fed meeting, higher rates typically imply more compressed multiples for growth stocks.”
Further, hawkish messages delivered by three Fed officials including New York Fed President John Williams last week underscored the U.S. central bank’s determination to do what it takes to ease price pressures.
Still, money market participants are pricing in 65% chance of a 25 basis points rate hike in February to 4.5%-4.75%, with a terminal rate of 4.84% in May 2023.
Economic data this week including housing starts, consumer confidence, weekly jobless claims and core personal consumption spending growth for November will set the investor mood, providing more clues on future rate hikes by the central bank.
At 10:35 a.m. ET, the Dow Jones Industrial Average .DJI was up 75.05 points, or 0.23%, at 32,995.51, the S&P 500 .SPX was down 5.68 points, or 0.15%, at 3,846.68, and the Nasdaq Composite .IXIC was down 68.24 points, or 0.64%, at 10,637.17.
Six of the 11 major S&P sectors were lower in morning trade, with rate-sensitive technology .SPLRCT, consumer discretionary .SPLRCD and communication services .SPLRCL leading declines.
Meta Platforms META.O fell 3.0% after the European Commission said it could impose a fine of up to 10% of the tech conglomerate’s annual global turnover if evidence showed an infringement of the EU’s antitrust laws.
L3Harris Technologies Inc LHX.N lost 3.4% after the U.S. defense contractor said it would buy hypersonic engine manufacturer Aerojet Rocketdyne Holdings Inc AJRD.N for $4.7 billion. Aerojet added 1.6%.
Shares of casino operatorsMelco Resorts & Entertainment MLCO.O, Las Vegas Sands Corp LVS.Nand Wynn Resorts WYNN.O fell in the range of 1.9% and 7.9% after Macau said on Friday six casino firms will invest around $15 billion as part of new 10-year contracts they signed to operate in the world’s biggest gambling hub.
Declining issues outnumbered advancers for a 1.23-to-1 ratio on the NYSE and 1.63-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and eight new lows, while the Nasdaq recorded two new highs and 59 new lows.
