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NEW YORK: Wall Street benchmarks dropped on Wednesday as a decline in technology stocks after Microsoft’s downbeat forecast and a bleak quarterly report from Boeing fanned fears of a recession.

Shares of Microsoft Corp fell 1.2% after it warned that growth in its lucrative cloud business could stall, while its PC unit continues to struggle.

Amazon.com Inc, Salesforce Inc and ServiceNow Inc, which have large cloud businesses, fell about 1% each. The S&P 500 technology index shed 1.3%.

Other major growth stocks, including Apple Inc, Alphabet Inc and Tesla Inc, also dropped between 0.4% and 3%.

Growth stocks, however, have enjoyed a bounce in January after a battering last year, with investors now focused on earnings reports to assess the impact of the Federal Reserve’s rate hikes and to gauge whether the renewed enthusiasm for these stocks will be sustained.

“One of the most resilient sectors in the economy (tech) is starting to feel the softness coming through,” said Larry Adam, chief investment officer at Raymond James.

“Microsoft particularly talked about December - and that’s another shot across the bow to the Fed that they make sure they do not overtighten and send the economy into a more severe recession than the one we’re getting.” An overwhelming majority of traders expect the Federal Reserve to raise interest rates by another 25 basis points in its meeting next week.

They now see the terminal rate peaking at 4.91% in June, even as Fed policymakers have repeatedly backed taking rates above the 5% level.

Data later in the week is likely to show December personal consumption expenditure index (PCE) fell 0.1% from a 0.1% rise in the prior month. Fourth quarter GDP advance numbers are also awaited.

Dow Jones Industrial Average constituent, Boeing Co slipped 1.2% as the planemaker’s losses widened in 2022 and it missed fourth-quarter revenue estimates.

At 12:21 p.m. ET, the Dow was down 208.76 points, or 0.62%, at 33,525.20, the S&P 500 was down 34.45 points, or 0.86%, at 3,982.50, and the Nasdaq Composite was down 139.09 points, or 1.23%, at 11,195.19.

Abbott Laboratories fell 1.9%, weighed down by lower-than-expected medical device sales in the fourth quarter.

In a bright spot, AT&T Inc jumped 5.4% on higher-than-expected quarterly subscriber additions, while Textron Inc added 0.9% as its revenue beat estimates.

News Corp jumped 6.1%, leading gains on the S&P 500, after Rupert Murdoch withdrew a proposal to reunite News Corp and Fox Corp.

Meanwhile, the New York Stock Exchange said a manual error triggered a technical issue on Tuesday, preventing the opening auctions in some listed stocks, leading to widespread confusion and attracting a review from the US Securities and Exchange Commission.

Declining issues outnumbered advancers for a 2.20-to-1 ratio on the NYSE and for a 1.92-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and one new low, while the Nasdaq recorded 45 new highs and 25 new lows.

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