NEW YORK: The S&P 500 and the Dow fell on Wednesday after stronger-than-expected retail sales data offered more evidence of resilience in the US economy, fueling concerns that the Federal Reserve could stick to its rate-hike campaign.
Gains in megacap stocks including Apple, Alphabet and Tesla, however, kept the tech-heavy Nasdaq afloat.
A Commerce Department report showed US retail sales increased by the most in nearly two years in January after two straight monthly declines as Americans boosted purchases of motor vehicles and other goods.
Economists polled by Reuters had forecast sales would increase 1.8%.
“All of the data continues to point towards how strong the economy is and if you want the Fed to stop tightening, you want to see a little weakness to give them cover,” said Thomas Hayes, chairman at Great Hill Capital LLC in New York.
“The consumer is strong despite the fact that their savings are going down. People still have jobs and they’re going to spend and that’s evident in the numbers this morning.”
The benchmark S&P 500 came under pressure on Tuesday after data showed US consumer prices accelerated in January, boosting expectations that the US central bank will raise the policy rate at least twice more this year to the 5-5.25% range. Still, the index is up 7.5% so far this year after a 19.4% slump in 2022, supported by better-than-expected earnings reports and a rebound in growth stocks.
At 12:52 p.m. ET, the Dow Jones Industrial Average was down 143.71 points, or 0.42%, at 33,945.56 and the S&P 500 was down 11.18 points, or 0.27%, at 4,124.95 The Nasdaq Composite was up 19.26 points, or 0.16%, at 11,979.40.
“Tech and growth stocks are benefiting on hopes that the US economy won’t have a recession and that favorite mega-cap tech plays will lead the way,” said Edward Moya, senior market analyst at Oanda.
“Investors still believe in the US economy and they are growing confident that the worst is over for tech.”
Eight of 11 major S&P 500 sectors slid, with a 2.6% drop in the energy index leading declines as oil prices fell. US-listed shares of Taiwan Semiconductor Manufacturing Co (TSMC) fell 6% after Warren Buffett’s Berkshire Hathaway Inc slashed its stake in the chipmaker.
Airbnb Inc jumped 12.8% after the vacation rental firm’s fourth-quarter results beat market expectations.
Devon Energy slumped 12.5% after the shale oil producer missed expectations for quarterly profit due to a hit to production from severe cold weather in the United States and higher expenses.
Declining issues outnumbered advancers for a 1.50-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.12-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new lows, while the Nasdaq recorded 42 new highs and 40 new lows.
Declining issues outnumbered advancers for a 2.51-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.54-to-1 ratio on the Nasdaq.
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