By Noel Randewich

(Reuters) – Shares of Arm Holdings and Instacart deepened their recent losses on Friday after analysts gave lukewarm ratings to the two companies that recently held highly anticipated initial public offerings.

Arm was last down 1.7% at $51.23. Earlier it dipped as low as $50.35, below the $51 price set in its IPO on Sept. 13.

Arm surged on its first day on Wall Street and has fallen every day since then.

Grocery delivery app Instacart, formally known as Maplebear, fell 2.1% to $30.02, marginally above the $30 price set in its IPO on Monday.

The weak performances of Arm and Instacart’s stocks since their market debuts add to doubts about whether a hoped-for revival in IPOs will materialize after a drought of more than 18 months.

In a client note, BTIG analyst Jake Fuller gave Instacart a “neutral” rating and warned that the company faces heavy competition from DoorDash and Uber Technologies in the slowly expanding market of grocery delivery.

In another note, Susquehanna analysts assigned Arm a “neutral” rating and $48 price target, saying the chip designer “appears to be pushing royalty rates to the limit, while also adding lower margin ‘subsystems’ revenue”.

That followed a Bernstein “underperform” rating with a $46 price target earlier this week, and a “hold” assigned to Arm by Needham and Company on Sept. 16.

Neutral and negative stock ratings are much less common on Wall Street than “buy” recommendations or other positive ratings. Of more than 10 thousand current analyst recommendations for S&P 500 companies, 56% are positive, 39% are neutral and 5% are negative, according to LSEG data.

Meanwhile, shares of Klaviyo, which debuted on Wednesday, dipped 1.8% to $33.12. Still, the marketing automation firm’s stock remains above the $30 IPO price.

The declines in Arm, Instacart and Klaviyo on Friday were in contrast to a 0.3% gain in the Nasdaq.

(Reporting by Noel Randewich; editing by Lance Tupper and Kirsten Donovan)

OSLO (Reuters) – A pair of F-35A Lockheed Martin fighter jets have landed on a motorway for the first time, footage from the Norwegian military showed, a step that enables them to reduce vulnerable time on the ground in times of war.

The two Royal Norwegian Air Force aircraft landed in Tervo, central Finland, on Thursday afternoon as part of a military exercise.

Immediately after landing, refuelling was carried out with the engines running, a so-called “hotpit refuelling”, the Norwegian military said, before the planes took off again.

“Fighter jets are vulnerable on the ground, so by being able to use small airfields – and now motorways – (this) increases our survivability in war,” Major General Rolf Folland, chief of the Royal Norwegian Air Force, said in the statement.

Finland, which joined NATO in April, shares a 1,300 km (810 mile) border with Russia. Norway is a founding member of the alliance.

Another type of F-35, the F-35B which is able to land vertically, has landed on roads before. This was a first for this particular version of the F-35 jet, which cannot land vertically.

F-16s are also able to land on roads.

Finland is planning to buy 64 F-35 fighter jets from Lockheed Martin.

(Reporting by Gwladys Fouche; Editing by Sharon Singleton)

By Andrew Hayley

BEIJING (Reuters) – U.S. incentives to boost consumption of more environmentally friendly fuel has created a new market for used Chinese cooking oil, worth almost $390 million in the last 12 months and growing rapidly, China’s customs data shows.

China has been shipping more waste oil to the U.S. since October 2022, two months after the Biden administration passed the Inflation Reduction Act (IRA) to promote clean energy, which included tax credits for production of sustainable aviation fuel (SAF) and extended incentives for biodiesel.

In the first eight months of 2023, Chinese exports of used cooking oil (UCO) to the U.S. totalled almost 384,000 metric tons, customs data shows. That accounted for around 65% of U.S. imports through August, data from shiptracking firm Kpler showed.

Used cooking oil can be refined into fuels such as biodiesel and SAF, which can be blended with conventional fuels to reduce carbon emissions. It is also a feedstock for renewable diesel, which is chemically equivalent to petroleum-based diesel.

The growth in the trade is “basically economically driven because of the funding of these programs and also the growth in these new facilities that have been invested into in the U.S. starting to come online and ramp up production,” said Sophie Byron, global head of biofuels pricing at S&P Global Commodity Insights.

In the U.S., renewable diesel is mostly used in California because of its Low Carbon Fuel Standard that allows producers to generate tradable credits for using low-carbon feedstocks such as UCO.

State-run Chinese oil majors Sinopec and PetroChina, which are among those shipping UCO cargoes to the U.S., according to Kpler, did not respond to requests for comment.

Under the IRA, biodiesel producers are eligible for a $1 per gallon tax credit. A new tax credit for SAF producers offers up to $1.75 per gallon, with additional credits for fuel achieving a lifecycle carbon reduction of greater than 50%.

Used cooking oil can be one-third the price of fresh vegetable oil, and has lower carbon intensity than non-waste feedstocks such as palm or canola oil.

Biodiesel produced from UCO has slightly lower energy content than petroleum diesel but cuts greenhouse gas pollution by as much as 83%, according to a 2022 study by the Argonne National Laboratory in the U.S.

China is the world’s largest producer of UCO, generating around 11.4 billion litres annually, according to data cited by the U.S. Department of Agriculture (USDA), but the lack of domestic policy support has limited its use in the country.

Powered by incentives, U.S. demand for UCO has displaced European purchases. Exports to Europe from China in the first eight months of 2023 fell by almost 56% from a year earlier, customs data shows.

In June, Germany asked the European Commission to investigate the flow of possibly mislabelled Chinese biofuels into the European Union.

These concerns have “made some of the EU buyers potentially a bit more nervous, so you might see the U.S. jumping on that opportunity as well,” S&P Global’s Byron said.

As of February, there are 72 U.S. plants that can produce biodiesel using UCO as a feedstock, according to the USDA.

($1 = 7.2879 yuan)

(Reporting by Andrew Hayley. Additional reporting by Stephanie Kelly; Editing by Christian Schmollinger)

(Reuters) – The moment investors have been waiting for seems to finally have arrived, as major central banks have indicated they are nearing the end of their string of interest-rate rises.

The week ahead brings more evidence of how much progress is left for developed-economy policymakers, while in the emerging world, India is set to enter the bond-market big time and a raft of central banks wrestle with a dilemma.

Here’s your week ahead in markets from Vidya Ranganathan in Singapore, Lewis Krauskopf in New York and Naomi Rovnick, Karin Strohecker and Amanda Cooper in London.

1PRICE POINTS

    The Federal Reserve’s preferred inflation gauge lands on Sept. 29, right after the central bank signalled it plans to keep interest rates higher for longer to tame price pressures.

    The personal consumption expenditures (PCE) price index rose 3.3% in the 12 months through July. The Fed tracks the PCE price indexes for its 2% inflation target.

    In its latest decision on Wednesday, the Fed kept interest rates steady, but projected monetary policy will remain significantly tighter through 2024 than previously expected.

    Investors will also be watching events in Washington, where U.S. lawmakers are haggling over a spending bill with a Sept. 30 deadline to avert a potential government shutdown that could rattle markets.

2PAUSE AND EFFECT

The European Central Bank has not called time on its battle against inflation, but markets are laser-focused on when it might. That means euro zone consumer prices data on Sept. 29 has the potential to move markets significantly.

Headline inflation in the euro area remains far above the ECB’s 2% target but has been moving in the right direction.

Consumer prices increased by 5.2% year on year in August, extending a downward trend that started last autumn.

The ECB raised its deposit rate to a record 4% this month and revised up its inflation forecast for next year.

But with the currency bloc’s economy weakening, the central bank also hinted a pause, at least, was coming. A further decline in inflation will undoubtedly spur intense speculation about the timing of its first rate cut.

3NO BARREL OF LAUGHS

After what has felt like a relentless period of cost-of-living crisis and rising interest rates, central banks are finally wrestling inflation into submission. Or so they thought.

The oil price – a major inflation variable that lies beyond the control of any policymaker – has risen above $90 a barrel to 10-month highs, serving an unpleasant reminder that what goes down can also easily go up again. The key driver has been Saudi Arabia and Russia, which account for over 20% of global output, agreeing to extend production cuts through year-end, to align supply with demand.

Most analysts agree the oil price would, in theory, have to remain higher for longer to really push up headline inflation. But the predictions of $100 oil are becoming louder. Central banks may not yet be able to declare the war on inflation over.

4WELCOME TO THE CLUB

India finally got the nod from JPMorgan to join its benchmark GBI-EM emerging market domestic bond index, which is followed by $236 billion of funds. The decision will draw billions of dollars into domestic fixed-income markets of the world’s fifth largest economy, with official inclusion due in increments from July 2024 until India reaches the 10% mark.

India began talks on including its debt in global indexes in 2019, but that ambition had been delayed by a number of factors, including its stance on capital gains taxes and local settlement.

Its government bond markets – in which foreigners currently hold less than 2% of outstanding paper – could get another boost when fellow index provider FTSE Russell decides on Sept. 28 whether to add India to its emerging bonds benchmark.

5ASIA’S CURRENCY CONUNDRUM

Asian central banks have a dilemma: how to handle weakening economic growth and peaking inflation, while arresting the slide in currencies to maintain stability in their financial systems.

The Bank of Indonesia kept rates steady for an eighth month on Thursday. Benign inflation might have argued for a cut, but Governor Perry Warjiyo emphasised currency stability was a deciding factor. The rupiah is at six-month lows and its yield premium over U.S. dollars has shrunk.

The same day, the Philippine central bank prioritised support for the peso over economic growth running at its slowest in nearly 12 years in the second quarter, with a hawkish pause.

The Bank of Thailand meets on Sept. 27 and is likely to stay hawkish, forced by the beleaguered baht, despite wide twin deficits and a struggling economy.

Heavy currency-market intervention has been one tactic. But much may rest on decisions of other central banks further afield, namely the Federal Reserve.

(Compiled by Amanda Cooper; Editing by Toby Chopra)

By Tim Reid, Alexandra Ulmer and Nathan Layne

(Reuters) – Rupert Murdoch’s departure as the chairman of Fox Corp and News Corp could provide an opportunity to mend the relationship between former President Donald Trump and Fox News as the 2024 election campaign heats up, said a former adviser to Trump and Republican strategists.

A mutually beneficial relationship between Trump and Fox News broke down after the 2020 election in the wake of the network’s coverage of the election and the Jan. 6, 2021 Capitol Hill riot by Trump supporters that left five dead and injured more than 140 police officers.

Fox chose in April to settle a defamation lawsuit with Dominion Voting Systems for $787.5 million over its amplification of Trump’s false vote-rigging claims in the 2020 election, which legal experts said was the largest settlement ever struck by an American media company.

Rupert Murdoch’s son, Lachlan Murdoch, will become the sole chairman of News Corp and continue as the chair and CEO of Fox, the companies said on Thursday, raising questions about how Fox’s political coverage may change ahead of the 2024 Republican primaries and presidential election.

Fox News continues to be the number one U.S. cable news network, playing an influential role in U.S. politics. Republicans prize its conservative-leaning audience, but critics accuse it of bias and say it has made U.S. politics more toxic.

Trump is far and away the front-runner for the Republican nomination. If he is selected as the Republican nominee, he would face Biden in a November 2024 general election.

“This provides an opportunity for a reset between President Trump and the Fox News network,” Republican strategist Ron Bonjean said of Lachlan Murdoch’s appointment. “The question is: does Lachlan Murdoch want to have a positive relationship with former President Donald Trump? Or does he want to see how things play out?”

Fox News did not immediately respond to a request for comment about political coverage under Lachlan Murdoch. Trump does still appear occasionally on Fox News, and gave an interview to the network’s chief political anchor, Bret Baier, in June.

An aide to Donald Trump said any response to Rupert Murdoch stepping down would come from Trump himself on his Truth Social media platform. Trump had not made any comment by Thursday evening.

Jason Osborne, an adviser to the former Republican president’s 2016 campaign, said he hoped Lachlan Murdoch and other Fox executives would seek to boost Trump coverage and that both sides could mend ties.

“The only path up is regaining those viewers that they lost. And the viewers that they lost veer more towards Trump,” Osborne said. “I think there will be outreach if it hasn’t already occurred.”

Fox executives in 2021 decided to more forcefully rebut Trump’s false claims that the 2020 presidential election was stolen from him through voter fraud, a conspiracy theory that fueled the Capitol Hill riot. Fox lost Trump-supporting viewers to smaller, right-wing cable networks such as Newsmax and One America News Network after the decision.

NOT 2016 AGAIN

Fox was a cheerleader for Trump in his ultimately successful 2016 White House campaign against Democrat Hillary Clinton, a symbiotic relationship that continued up to the 2020 election.

Trump boosted Fox’s ratings, while Fox boosted Trump politically, said Larry Stuelpnagel, an associate professor of journalism and political science at Northwestern University and a former broadcast journalist.

Dan Cassino, a politics professor at Fairleigh Dickinson University in New Jersey, said he does not believe Fox’s coverage of Trump will return to 2016 levels. But he added indications are that Lachlan Murdoch is not anti-Trump and as Trump remains the front-runner, coverage of him will likely be “high volume”.

During the Dominion litigation, documents emerged in which Lachlan Murdoch instructed Fox News executives to rein in critical coverage of Trump after he lost the 2020 election.

Analysts said those could be heat-of-the-moment instructions over ratings, rather than a vision for how he wanted to cover Trump in the future.

Karen Finney, a Democratic strategist, said Fox’s support of Trump’s election lies had been costly, but she was skeptical the network would fundamentally change when it comes to Trump. “Their coverage continues to peddle in misinformation and conspiracy theories,” Finney said.

Stuelpnagel said he believed the high cost of the Dominion lawsuit might make Lachlan Murdoch tread carefully on Trump coverage.

“The Dominion lawsuit cost them dearly,” Stuelpnagel said. “I think Lachlan is going to be more cautious in how he deals with Trump. I don’t see a wholesale change in the direction of network.”

(Reporting by Tim Reid, Nathan Layne and Alexandra Ulmer; Editing by Heather Timmons and Jamie Freed)

By Helen Coster, Aditya Soni and Dawn Chmielewski

(Reuters) -Rupert Murdoch has stepped down as the chairman of Fox Corp and News Corp, ending a more than seven-decade career during which he created a media empire spanning from Australia to the United States.

His son, Lachlan Murdoch, will become the sole chairman of News Corp and continue as the chair and CEO of Fox, the companies said on Thursday. The transition solidifies Lachlan’s role as the leader of the media empire, putting to rest questions of succession within the Murdoch family.

Lachlan takes over the Murdoch empire as the media industry is battered by challenges ranging from the decline in traditional television viewership, to news organizations battling tech companies over alleged copyright theft in the age of artificial intelligence.

In a memo to staff Thursday, Murdoch wrote: “Our companies are in robust health, as am I.”

Earlier this year Murdoch, 92, scrapped a plan that would have reunited his media empire by merging Fox and News Corp, after several top shareholders rejected the proposal on the grounds that it would fail to realize the full value of the company.

Murdoch, who has near-controlling stakes in both companies, will be appointed chairman emeritus of both companies.

The executive transition coincides with the annual meeting of shareholders for Fox and News Corp in mid-November.

Fox News continues to be the number one U.S. cable news network, playing an influential role in U.S. politics, particularly among Republicans who prize Fox’s conservative-leaning audience.

Earlier this year, Fox settled a defamation lawsuit with Dominion Voting Systems for $787.5 million, averting a trial in which Murdoch, Lachlan and Fox executives and hosts were expected to testify.

The trial would have put Fox in the crosshairs over its amplification of false vote-rigging claims in the 2020 U.S. presidential election. Legal experts said the settlement was the largest ever struck by an American media company.

Fox still faces a lawsuit from voting technology firm Smartmatic, which in 2021 sued Fox for $2.7 billion over similar claims, as well as shareholder lawsuits accusing Fox Corp officers and directors of breaching their duties by allowing the company to become mired in defamation claims.

“Many of his enterprises still produce a lot of important news which helps keep the world informed in ways that might not have occurred were it not for his leadership,” said Brian Wieser, media analyst at advisory firm Madison & Wall.

“But it’s impossible to ignore the other side of that, where Fox News amplified toxicity in the US political environment, and other properties similarly impacted other territories.”

Shares of Fox ended the day 3.2% higher after the news of Murdoch stepping down. News Corp shares gained 1.3%.

SUCCESSION

Murdoch, who has six children, has long desired his children to eventually take the reins of the empire. His son James had been CEO of Twenty-First Century Fox before the company’s decision to sell its film and television assets to Walt Disney Co for $71.3 billion, a deal that closed in 2019.

James then channeled proceeds from the deal into a private investment firm, Lupa Systems. Lachlan was appointed CEO of the new Fox Corp.

Upon Murdoch’s death, his other children could challenge Lachlan’s power. Murdoch controls News Corp and Fox Corp through a Reno, Nevada-based family trust that holds a roughly a 40% stake in voting shares of each company. He also holds a small number of shares of the companies outside the trust.

Each of Murdoch’s four children from his first two marriages – Lachlan, James, Elisabeth and Prudence — has a stake in the trust. His youngest daughters Chloe and Grace, from his third wife Wendi Deng, do not have voting rights in the trust.

The transfer of News Corp and Fox Corp voting shares from Murdoch to his four adult children could create a scenario in which three of the children could out-vote a fourth, potentially setting up a battle over the future of the companies, even as Lachlan Murdoch now oversees Fox Corp. and News Corp.

Fox and News Corp have a dual-share system, with non-voting Class A shares and voting Class B shares. The shares in Fox and News Corp owned by Murdoch’s children through the trust are a combination of both classes of shares.

Concerns about Murdoch’s health have dogged him in recent years. In 2018, he suffered a serious back injury after he fell on his son Lachlan’s yacht, according to several employees.

Over the past year, Murdoch has started appearing back at Fox and News Corp’s offices in London and New York, employees say.

“It’s the end of the founder-mogul era,” said former News Corp executive Jonathan Miller, who worked alongside the elder Murdoch.

A generation of media titans, including Sumner Redstone, Ted Turner and John Malone, shaped the modern industry, Miller said. Now, the mantle has been passed from founders to executives who have risen through the ranks.

(Reporting by Helen Coster in New York, Aditya Soni in Bengaluru and Dawn Chmielewski in Los Angeles; additional reporting by Leela de Kretzer in New York; Editing by Krishna Chandra Eluri, Saumyadeb Chakrabarty and Nick Zieminski)

By Josh Ye

HONG KONG (Reuters) – China’s craze over generative artificial intelligence has triggered a flurry of product announcements from startups and tech giants on an almost daily basis, but investors are warning a shake out is imminent as cost and profit pressures grow.

The buzz in China, first ignited by the success of OpenAI’s ChatGPT almost a year ago, has given rise to what a senior Tencent executive described this month as “war of a hundred models”, as it and rivals from Baidu to Alibaba to Huawei promote their offerings.

China now has at least 130 large language models (LLMs), accounting for 40% of the global total and just behind the United States’ 50% share, according to brokerage CLSA. Additionally, companies have also announced dozens of “industry-specific LLMs” that link to their core model.

However, investors and analysts say that most were yet to find viable business models, were too similar to each other and were now grappling with surging costs.

Tensions between Beijing and Washington have also weighed on the sector, as U.S. dollar funds invest less in early-stage projects and difficulties obtaining AI chips made by the likes of Nvidia start to bite.

“Only those with the strongest capabilities will survive,” said Esme Pau, head of China internet and digital asset research at Macquarie Group, who expects consolidation and a price war as players compete for users.

She added that several leading companies have signaled they will compete on price to gain market share, just as cloud services such as those belonging to Alibaba and Tencent have done.

“In the next six-12 months, LLMs with lower capacities will gradually be eliminated due to chip restrictions, high costs and intensifying competition,” Pau said.

FOUNDERS AND INCUMBENTS

Opinions on which firms will last vary widely.

Yuan Hongwei, chair of Shenzhen-based venture capital Z&Y Capital, said she believed that only two to three general-purpose LLMs will end up dominating the market.

That is why her firm looks for experienced founders when deciding on which startups to invest in.

Z&Y, whose past investments include drone maker DJI and autonomous driving startup Pony.ai, eventually decided to back Baichuan Intelligence, a five-month-old firm looking to build an open-source AI model to rival Meta Platform’s Llama 2.

Baichuan was started by Wang Xiaochuan, founder of China’s No.2 internet search engine Sogou Inc, and became one of the first five companies to receive Beijing’s approval to release a public chatbot in late August. The company is on track to close a second round that will value it at $1 billion, Wang said.

“We see an opportunity here,” Yuan said. “Wang himself is leading this project. Given his understanding of the digital business, his success with Sogou and how he commands attention industry-wide, we think it is our best bet.”

Several other big name entrepreneurs and tech executives are behind new Chinese AI startups, such as Google China’s former chief Kai-Fu Lee and Yan Juejie, a former vice-president of SenseTime.

Others said that China’s largest tech companies Alibaba, Tencent and Baidu ultimately had the biggest headstart and deep pockets to succeed, given their large user bases and wide range of services. For instance, they could easily offer generative AI services as an additional plug-in to their cloud users.

“The incumbent tech giants have inherited an unfair advantage of a majority of low-hanging fruit business scenarios from their established ecosystems,” said Tony Tung, managing director at Gobi Partners GBA.

Tung added that some investors regret prematurely investing in LLM firms at the peak of the hype earlier this year with many such startups struggling to build strong business cases and now looking to partner with tech giants to find use cases or be potentially sold to them.

“Many people end up developing similar LLMs, that are looking for similar problems to solve, with micro innovation in the data processing technique or model architecture,” he said.

“At this particular moment, investors have certainly sobered up quite a bit compared to early this year.”

(Reporting by Josh Ye, Editing by Brenda Goh and Sam Holmes)

By Stephen Culp

NEW YORK (Reuters) – Wall Street tanked in a broad sell-off on Thursday, as investor risk appetite was dashed by worries that the Federal Reserve’s restrictive monetary policy will remain in place for longer than anticipated.

All three major U.S. stock indexes tumbled more than 1% and benchmark U.S. Treasury yields touched a 10-year peak the day after Fed Chairman Jerome Powell warned inflation still has a long way to go before approaching the central bank’s 2% target.

Interest rate-sensitive megacaps, led by Amazon.com, Nvidia Corp, Apple Inc and Alphabet Inc dragged the S&P 500 and the Nasdaq to their lowest closing levels since June.

On Wednesday, at the conclusion of its two-day monetary policy meeting, the central bank left the Fed funds target rate unchanged at 5.25%-5.50%, as expected.

But revised economic projections, including the closely watched dot plot, showed interest rates will remain elevated through next year, dampening hopes for easing of policy before 2025.

“If you do have rates higher for longer, you have more strain on the system and more pressure on the economy,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. “It gives people another chance to say that the lag time of higher rates – which we’re just starting to feel – might really bite.”

“We’re ratcheting up the possibility that we won’t get a soft landing,” Martin said, citing economic pressure from higher rates, along with student loan payments resuming, the UAW strike, a potential government shutdown, higher Treasury yields, climbing crude prices and a strengthening dollar.

An unexpected 9% drop in initial U.S. jobless claims, to the lowest level in eight months, played into the Fed’s notion that the labor market remains too tight, putting upward pressure on wages, and the economy is resilient enough to withstand higher rates for longer.

“Higher for longer” has become a common credo among the central banks of the world’s biggest economies as global policy tightening, in order to tame inflation, reaches its peak.

“The headlines this morning were quite something when it came to central banks,” Martin said. “All of them were hawkish.”

At 4:12PM ET, the Dow Jones Industrial Average fell 370.46 points, or 1.08%, to 34,070.42, the S&P 500 lost 72.2 points, or 1.64%, to 4,330 and the Nasdaq Composite dropped 245.14 points, or 1.82%, to 13,223.99.

All 11 major sectors of the S&P 500 lost nearly 1% or more, with real estate stocks suffering its biggest one-day percentage drop since March.

Semiconductor firm Broadcom slid 2.7% following a report that Alphabet-owned Google’s executives discussed dropping the company as a supplier of artificial intelligence chips as early as 2027.

The Philadelphia chip index shed 1.8%.

Klaviyo Inc gained 2.9% the day after its debut as a public company, while another recent IPO, Arm Holdings lost 1.4% to just a dollar above its $51 offer price.

Shares of FedEx jumped 4.5% after the package delivery company delivered a big profit beat.

Fox Corp and News Corp gained 3.2% and 1.3%, respectively, following news that Rupert Murdoch will step aside as chairman.

Declining issues outnumbered advancing ones on the NYSE by a 5.89-to-1 ratio; on Nasdaq, a 2.80-to-1 ratio favored decliners.

The S&P 500 posted three new 52-week highs and 29 new lows; the Nasdaq Composite recorded 22 new highs and 373 new lows.

Volume on U.S. exchanges was 10.76 billion shares, compared with the 10.12 billion average for the full session over the last 20 trading days.

(Reporting by Stephen Culp in New York; Additional reporting by Ankika Biswas and Shristi Achar A in Bengaluru; Editing by David Gregorio)

By Stephen Culp

NEW YORK (Reuters) – Wall Street tumbled on Thursday, with investor risk appetite dampened by worries that the Federal Reserve’s restrictive monetary policy will remain in place for longer than anticipated.

All three major U.S. stock indexes ended the session deep in negative territory and benchmark U.S. Treasury yields touched a 10-year peak the day after Fed Chairman Jerome Powell warned inflation still has a long way to go before approaching the central bank’s 2% target.

Interest rate sensitive megacaps dragged the S&P 500 and the Nasdaq down to their lowest closing levels since June.

On Wednesday, at the conclusion of its two-day monetary policy meeting, the central bank left the Fed funds target rate unchanged at 5.25%-5.50%, as expected.

But revised economic projections, including the closely watched dot plot, showed interest rates will remain elevated through next year, dampening hopes for easing of policy before 2025.

“If you do have rates higher for longer, you have more strain on the system and more pressure on the economy,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. “It gives people another chance to say that the lag time of higher rates – which we’re just starting to feel – might really bite.”

Martin added that with higher rates, along with student loan payments resuming, the UAW strike, a potential government shutdown, along with higher Treasury yields, climbing crude prices and a strengthening dollar, “We’re ratcheting up the possibility that we won’t get a soft landing.”

An unexpected 9% drop in initial U.S. jobless claims, to the lowest level in eight months, played into the Fed’s notion that the labor market remains too tight, putting upward pressure on wages, and the economy is resilient enough to withstand higher rates for longer.

“Higher for longer” has become a common credo among the central banks of the world’s biggest economies as global policy tightening, in order to tame inflation, reaches its peak.

“The headlines this morning were quite something when it came to central banks,” Martin said. “All of them were hawkish.”

According to preliminary data, the S&P 500 lost 72.79 points, or 1.64%, to end at 4,329.91 points, while the Nasdaq Composite lost 246.56 points, or 1.83%, to 13,222.56. The Dow Jones Industrial Average fell 373.50 points, or 1.08%, to 34,067.38.

Semiconductor firm Broadcom dropped following a report that Alphabet-owned Google’s executives discussed dropping the company as a supplier of artificial intelligence chips as early as 2027.

Klaviyo Inc shares dipped the day after its debut as a public company, as another recent IPO Arm Holdings, threatened to break below its $51 offer price.

Shares of FedEx jumped after the package delivery company delivered a big profit beat.

Fox Corp and News Corp gained advanced following news that Rupert Murdoch will step aside as chairman.

(Reporting by Stephen Culp in New York; Additional reporting by Ankika Biswas and Shristi Achar A in Bengaluru; Editing by David Gregorio)

By Stephen Culp

NEW YORK (Reuters) – Wall Street tumbled on Thursday, with investor risk appetite dampened by worries that the Federal Reserve’s monetary policy will remain restrictive for longer.

All three major U.S. stock indexes were sharply lower as benchmark U.S. Treasury yields touched a 10-year peak the day after Fed Chairman Jerome Powell warned inflation still has a long way to go before approaching the central bank’s 2% target.

Interest rate sensitive megacaps, led by Amazon.com and Nvidia Corp weighed the S&P 500 and the Nasdaq down 1% or more.

If current levels hold, the S&P 500 will close at its lowest since late June and the Nasdaq posting its lowest close since mid-August.

“It’s a risk-off day. The market is repricing realistic expectations on what the Fed can and cannot do,” said Megan Horneman, CIO at Verdance Capital Advisors, Hunt Valley Maryland. “There were expectations that the Fed could cut rates in the first half of next year and after yesterday’s meeting that looks unlikely.”

On Wednesday, at the conclusion of its two-day monetary policy meeting, the central bank left the Fed funds target rate unchanged at 5.25%-5.50%, as expected.

But revised economic projections, including the closely watched dot plot, showed interest rates will remain elevated through next year, dampening hopes for a dovish policy pivot before 2025.

An unexpected 9% drop in initial U.S. jobless claims played into the Fed’s notion that the labor market remains too tight, putting upward pressure on wages, and the economy is resilient enough to withstand higher rates for longer.

“Some of today’s economic data, particularly in the job market, has people concerned that the Fed might have to raise rates again in November,” Horneman added.

“Higher for longer” has become a common credo among the central banks of the world’s biggest economies as global policy tightening, in order to tame inflation, reaches its peak.

At 2:11PM ET, the Dow Jones Industrial Average fell 165.47 points, or 0.48%, to 34,275.41, the S&P 500 lost 43.89 points, or 1.00%, to 4,358.31 and the Nasdaq Composite dropped 151.13 points, or 1.12%, to 13,318.00.

All 11 major sectors of the S&P 500 were last in negative territory, with real estate stocks suffering the biggest percentage drop.

Semiconductor firm Broadcom slid 1.7% following a report that Alphabet-owned Google’s executives discussed dropping the company as a supplier of artificial intelligence chips as early as 2027.

The Philadelphia chip index shed 1.0%.

Klaviyo Inc gained 0.2% the day after its debut as a public company, while another recent IPO, Arm Holdings was off 2.9% and threatening to break below its $51 offer price.

Fox Corp and News Corp both gained 3.2% following news that Rupert Murdoch will step aside as chairman.

Declining issues outnumbered advancing ones on the NYSE by a 4.74-to-1 ratio; on Nasdaq, a 2.38-to-1 ratio favored decliners.

The S&P 500 posted 3 new 52-week highs and 25 new lows; the Nasdaq Composite recorded 17 new highs and 333 new lows.

(Reporting by Stephen Culp in New York; Additional reporting by Ankika Biswas and Shristi Achar A in Bengaluru; Editing by David Gregorio)