NEW YORK: Wall Street indexes dropped 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.
The S&P 500 technology sector was among the biggest losing sub-indexes as heavyweights Microsoft Corp slipped 0.6% and Apple Inc fell 1%.
U.S. stocks have come under pressure in recent days as investors have turned cautious following Friday’s weak August payrolls data, while pressures from rising costs, despite the economy slowing, raised doubts over the Fed’s timeline on tapering.
“There are concerns in the market about possible rising inflation because supply chain restrictions and pent up consumer demand are expected to hike up prices for goods and the market might be taking the view that the Fed might not be so dovish going forward,” said Jon Maier, chief investment officer at Global X.
St. Louis Federal Reserve Bank President James Bullard told the Financial Times that the Fed should move forward with a plan to trim its massive pandemic stimulus program despite a slowdown in job growth.
The S&P 500 and the Nasdaq have gained 18.5% and 19.8%, respectively, so far this year on support from easy central bank policies, but a jump in coronavirus infections and recent weak economic data have raised worries on the pace of recovery.
“The ebbs and flows of the pandemic will be with us here. We haven’t had a correction in a while. There are some large factors here so we wouldn’t be surprised if we do get a correction,” said Matt Stucky, portfolio manager at Northwestern Mutual Wealth Management in Milwaukee, Wisconsin.
Eight out of eleven sub-sectors fell with economy-sensitive sectors like industrials, materials and energy stocks among top losers in early trading.
At 11:57 a.m. ET, the Dow Jones Industrial Average was down 147.63 points, or 0.42%, at 34,952.37, the S&P 500 was down 21.62 points, or 0.48%, at 4,498.41, and the Nasdaq Composite was down 159.95 points, or 1.04%, at 15,214.38.
Perrigo Company Plc jumped 9.4% after the drugmaker said it plans to buy HRA Pharma from investment firms Astorg and Goldman Sachs Asset Management in a deal valued at 1.8 billion euros ($2.13 billion).
Crypto currency exchange Coinbase Global Inc fell 3.3% after the U.S. securities regulator threatened to sue the firm if it goes ahead with plans to launch a crypto lending scheme.
U.S. payments giant PayPal Holdings Inc fell 2% after it said it would acquire Japanese buy now, pay later firm Paidy in a $2.7 billion largely cash deal.
Investors also await quarterly results after the bell from meme-stock darling GameStop.
Declining issues outnumbered advancers for a 2.25-to-1 ratio on the NYSE and for a 3.04-to-1 ratio on the Nasdaq.
The S&P index recorded 24 new 52-week highs and one new low, while the Nasdaq recorded 42 new highs and 30 new lows.