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Wall Street declines as economic data heightens inflation fears and Apple declines

Wall Street declines as economic data heightens inflation fears and Apple declines

Raindrops hang on a Wall Street sign outside the New York Stock Exchange in Manhattan in New York City, New York, U.S. October 26, 2020. Photo: Mike Segar/Reuters. Obtain licensing rights

  • Apple retracts China’s report banning government officials’ iPhone use
  • Lockheed Martin backtracks on lowering F-35 delivery forecasts
  • The Fed’s Beige Book showed “modest” economic growth in the US
  • Indices declined: Dow Jones 0.68%, Standard & Poor’s 0.89%, Nasdaq 1.28%.

Sept. 6 (Reuters) – Wall Street stocks fell on Wednesday after stronger-than-expected data in the services sector fueled fears of flat inflation and higher interest rates for longer, while weakness in Apple Inc stock weighed on indices more.

The Institute for Supply Management (ISM) said on Wednesday that its non-manufacturing PMI rose to 54.5 last month versus a forecast of 52.5, while a measure of the prices service sector firms pay for inputs increased.

CME FedWatch showed that traders’ bets that the Fed will pause interest rate hikes at its September 20-21 meeting were at 91%, while bets on a pause in November fell to 46.8% from about 57% before the data.

“The stronger-than-expected ISM data shows that investors are still not very adept at reading post-pandemic tea leaves,” said Carol Schleif, chief investment officer of BMO Family’s Minneapolis office.

While investors were hoping for a rate cut soon, Schleif said the data showed a strong economy and inflation not abating “as fast as the Fed needs to start cutting rates anytime in the foreseeable future.”

Earlier today, Boston Fed President Susan Collins stressed the need for the central bank to “proceed cautiously” with its next monetary policy steps.

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The Dow Jones Industrial Average fell 235.55 points, or 0.68%, to 34,406.42 points. The Standard & Poor’s 500 index lost 40.09 points, or 0.89%, to 4,456.74 points, and the Nasdaq Composite Index fell 179.32 points, or 1.28%, to 13,841.63 points.

Among the 11 major industry sectors in the S&P 500, technology (.SPLRCT) was the biggest loser, down 1.6%. Defense Utilities (.SPLRCU) was the only gainer, up 0.1%.

Apple stock was the biggest drag on the three major indexes, dropping 3.7% after a report that China has banned officials of central government agencies from using iPhones and other foreign-branded devices for work.

Shares of other major companies also fell, with shares of Tesla (TSLA.O), (AMZN.O) and NVIDIA (NVDA.O) dropping between 1.6% and 3.8%, as the yields on 10- and 2-year US Treasury bonds moved. . Rising after the economic data.

The S&P 500 barely reacted after the Fed’s “Beige Book” was released to the US economy, a week before the expected inflation data for August and the Fed’s interest rate decision on September 20.

The report showed “modest” economic growth in the United States in recent weeks, while job growth was “weak”, and inflation slowed in most parts of the country.

The recent rise in oil prices has also raised fears of continued inflationary pressures that may force the Fed to maintain its hawkish stance on interest rates.

Lockheed Martin fell 4.5% after the US arms maker cut expectations for delivery of its F-35 jets.

Roku (ROKU.O) rose 1.9% after the video streaming company said it would cut its workforce by about 10% and limit new hiring.

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Declining issues outnumbered advancers on the New York Stock Exchange by a ratio of 2.38 to 1; On the Nasdaq, a ratio of 2.10 to 1 favored the losers.

The S&P 500 posted three 52-week highs and 25 new lows; The Nasdaq Composite Index posted 33 new highs and 146 new lows.

(Reporting by Sinead Caro in New York and Shristi A. Ashar and Amrutha Khandikar in Bengaluru) Editing by Vinay Dwivedi and Richard Chang

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Shristi is a reporter and is part of the Markets team reporting on equity markets across the US, UK, Canada, Europe and emerging markets.