Stock market news live updates: Stocks drop, tech shares sink after Fed minutes hint at earlier liftoff on interest rates; Nasdaq slides by 3.3% – Yahoo Finance

Stocks sold off Wednesday afternoon, with a slide in technology stocks accelerating into market close as investors digested the Federal Reserve’s latest meeting minutes suggesting a potentially quicker path toward raising interest rates.

The Nasdaq Composite slid by about 3.3% in its worst …….

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Stocks sold off Wednesday afternoon, with a slide in technology stocks accelerating into market close as investors digested the Federal Reserve’s latest meeting minutes suggesting a potentially quicker path toward raising interest rates.

The Nasdaq Composite slid by about 3.3% in its worst day since February 2021 as a rout in technology stocks deepened. The S&P 500 dropped by nearly 2%, with the interest-rate sensitive real estate sector underperforming alongside information technology and communication services stocks. The Dow dropped nearly 400 points, or more than 1%. 

Investors eyed the minutes from the Federal Open Market Committee’s (FOMC) December meeting, which suggested the central bank was considering a faster removal of its monetary policy accommodation than previously anticipated. Policymakers suggested that against the backdrop of a firming economic recovery and elevated inflation, interest rates could rise sooner than anticipated. And some policymakers also telegraphed they would opt for shrinking the Fed’s balance sheet soon thereafter. 

“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” the minutes said. “Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate.” 

Treasury yields jumped to build on gains after moving sharply higher on Monday and Tuesday, which had added pressure to technology and growth stocks valued heavily on future earnings potential. The benchmark 10-year jumped to a 9-month high of more than 1.7% following the release of the Fed’s meeting minutes Wednesday afternoon.

“The meeting minutes further confirm the Fed’s recent hawkish shift and its desires to start to remove monetary accommodation this year,” Lawrence Gillum, Fixed Income Strategist for LPL Financial, said in an email Wednesday morning. While most of the information was known, that ‘some’ members wanted to start to reduce the Fed’s $8.5 trillion balance sheet soon after the first-rate hike is likely going to be further scrutinized in upcoming meetings.”

“Seems like the Fed wants to move quicker than it has in the past and yields, across the curve, are moving higher at the prospects of a quicker tightening timeline,” Gillum added. 

Earlier Wednesday morning, investors also digested fresh upbeat economic data, as private payroll gains handily exceeded estimates for December. ADP said Wednesday that private sector employers added back 807,000 jobs during the final month of November, nearly doubling …….

Source: https://finance.yahoo.com/news/stock-market-news-live-updates-january-5-2022-231453181.html