- Major US stock indices fell on Wednesday as rising yields put large-cap tech stocks under selling pressure.
- The recent aggressive statements from the Fed are behind the move higher in yields, with the focus now on the Fed Minutes at 1900 BST.
- The S&P 500 fell more than 1.0% to 4,460 from Tuesday’s close of 4,525.
Major US Stock Indices tumbled on Wednesday in the hours before the release of the Fed’s March meeting minutes, with large-cap tech stocks leading the decline amid a continued rise in US bond yields. Dovish comments on Tuesday from Fed Vice Chair Lael Brainard were the catalyst for a surge in yields across the US curve. Brainard is typically one of the more dovish members of the central bank.
Every other Fed member who has spoken in recent days has also sounded aggressive, agreeing on the need to 1) get rates back to neutral quickly, and 2) begin a rapid balance sheet reduction. This is very much the expected tone of the next minute release, scheduled for 1900 BST and this could keep the upward pressure on US yields. That suggests that the main US indices remain at risk of suffering. more losses.
The S&P 500 was last seen trading down 1.3% at 4,460, after falling from Tuesday’s closing levels of 4,520 and in doing so falling below its 200-day moving average. The main drag on the index is its mega-cap tech stocks, including Microsoft (-2.9%), Apple (-2.2%), Nvidia (-5.3%), Facebook (-3.2%), Amazon (-3.2%). Tesla (-4.2%) and Alphabet (-2.0%). Underperformance in these names, as well as in the technology sector in general, sent the Nasdaq 100 Index down closer to 2.5%, recovering its reversal from weekly highs near 5.0%.
The Dow Jones, meanwhile, was down 0.8%, given its greater weighting towards equity sectors that perform better in a risk aversion/higher returns environment. Looking at the S&P 500 GICS sectors, despite slightly lower oil prices on the day, energy is up more than 1.5%, while the defense utilities and consumer staples sectors gained 1.0. % and 0.5%, respectively. Despite rising yields and growing evidence of a housing market slowdown, real estate rose 0.4%. The worst performers were consumer discretionary (-3.0%), information technology (-2.8%) and communication services (-2.0%).
Technical levels
Source: Fx Street
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