By Shreyashi Sanyal and Noel Randewich
(Reuters) – The Nasdaq tumbled on Thursday in a mixed day on Wall Street as the Federal Reserve’s announcement of a faster end to its pandemic-era stimulus pushed investors toward more economically sensitive sectors and away from technology stocks.
Big Tech pulled down the Nasdaq and kept the S&P 500 in negative territory, even as most sectors gained.
Nvidia dropped 6.4%, Apple lost 3.1% and Microsoft declined 2.4%. All three of those heavyweight growth stocks have outperformed the broader market in 2021, with Nvidia more than 100% year to date.
The U.S. central bank said on Wednesday it would end its bond purchases in March and signaled three quarter-percentage-point interest rate hikes by the end of 2022.
That pleased many investors, who have increasingly worried about an inflation spike related the coronavirus pandemic.
The S&P 500 value index rallied 1.1% on Thursday, while the growth index dropped 1.5%, reflecting investors’ expectations that high-growth stocks tend to underperform when interest rates rise. The value index includes stocks viewed as more likely to do well during an economic recovery.
While the S&P 500 lost ground, seven of the 11 major S&P 500 sector indexes were higher, with economy-focused financials, energy and materials leading the way.
“The Fed gave the market what it wanted, and today I think investors are turning again to pandemic uncertainty, and they’re also cautious going into the end of the year,” said Lindsey Bell, chief investment strategist at Ally Invest, in Charlotte, North Carolina.
Recent readings on surging producer and consumer prices, as well as the fast-spreading Omicron variant of the coronavirus, have fueled anxiety. The S&P 500 remains up about 25% in 2021 and it is trading near record highs.
In afternoon trading, the Dow Jones Industrial Average was up 0.13% at 36,975.69, while the S&P 500 lost 0.73% to 4,675.32.
The Nasdaq Composite dropped 2.43% to 15,187.53.
The CBOE Volatility index, often considered Wall Street’s fear gauge, slipped to a three-week low.
Data showed the number of Americans filing new claims for unemployment benefits increased moderately last week, remaining at levels consistent with tightening labor market conditions.
Separately, a survey showed production at U.S. factories increased to its highest level in nearly three years in November.
Lennar Corp fell 3.2% after the homebuilder missed analysts’ estimates for quarterly profit as pandemic-led supply chain issues pushed lumber costs higher and delayed house deliveries.
Advancing issues outnumbered declining ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored decliners.
The S&P 500 posted 69 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 39 new highs and 106 new lows.
(Reporting by Shreyashi Sanyal in Bengaluru and Noel Randewich in Oakland, California; Editing by Saumyadeb Chakrabarty, Maju Samuel and Dan Grebler)
