Wall Street falls on fears of slowing economic growth
Wall Street dipped on Wednesday on concerns that the spread of the Delta coronavirus variant could slow economic growth and on uncertainty over the timeline for the Federal Reserve to pull back its accommodative policies.
Shares of tech heavyweights were among losers with Microsoft Corp, Facebook Inc and Google-owner Alphabet Inc were down between 0.1% and 0.6%.
Nine out of eleven sub-sectors fell with economy-sensitive sectors like industrials, materials and real estate leading declines.
Gains in energy shares helped limit some losses with Exxon Mobil, Chevron, Occidental Petroleum and Halliburton up between 0.6% and 0.3%, as oil prices jumped on lower output.
U.S. stocks have come under pressure in recent days as investors have turned increasingly cautious following Friday’s weak August payrolls data and uncertainty over the Fed’s tapering.
“The big question is the uncertainty around the level of economic growth slowdown, tapering and the potential of escalating inflation,” said Sam Stovall, chief investment strategist at CFRA.
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“Investors are thinking they don’t want to be highly exposed towards potential growth sectors, instead the interest remains towards the safety of tech stocks.”
St. Louis Federal Reserve Bank President James Bullard told the Financial Times that the U.S. Federal Reserve should move forward with a plan to trim its massive pandemic stimulus program despite a slowdown in job growth.
Stovall said CFRA economists are lowering the growth forecasts for the third quarter, but were still optimistic for the wider economy to grow for the rest of the year.
The S&P 500 and the Nasdaq have gained around 20% so far this year on support from easy central bank policies, but a jump in coronavirus infections and weak economic data have raised worries on the pace of economic recovery.
At 10:17 a.m. ET, the Dow Jones Industrial Average was down 11.74 points, or 0.03%, at 35,088.26, the S&P 500 was down 2.96 points, or 0.07%, at 4,517.07, and the Nasdaq Composite was down 43.66 points, or 0.28%, at 15,330.67.
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Declining issues outnumbered advancers for a 1.29-to-1 ratio on the NYSE and for a 2.13-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and one new low, while the Nasdaq recorded 31 new highs and 16 new lows.
(Reporting by Shashank Nayar in Bengaluru; Editing by Anil D’Silva and Arun Koyyur)
