Tech stocks pressure Wall St as caution sets in ahead of Fed meet

Reuters

10 hours ago

Aug 20 (Reuters) - Wall Street's main indexes declined on Wednesday and the Nasdaq hit a two-week low as a rally in technology stocks cooled and caution prevailed ahead of the Federal Reserve's highly anticipated Jackson Hole symposium later this week
After driving much of the market's recovery from the April selloff, tech stocks are pulling back as investors reassess high valuations in the sector. The S&P 500 technology index (.SPLRCT), opens new tab slid 1.7% on the day.
Deepening concerns of government interference with companies, sources said the Trump administration was looking into taking equity stakes in chip companies such as Intel in exchange for grants under the CHIPS Act - just weeks after unprecedented revenue-sharing deals with Nvidia and AMD.
Nvidia (NVDA.O), opens new tab slid 2.8% and Advanced Micro Devices (AMD.O), opens new tab lost 3%, while Intel (INTC.O), opens new tab and Micron (MU.O), opens new tab fell about 6% each. Nvidia's quarterly results on Aug. 27 are keenly awaited for clues on demand for artificial intelligence.
Other megacap growth names such as Apple and Meta (META.O), opens new tab also came under pressure, falling 1.4% and 2.3%, respectively.
"To see a little pullback here after a big move up is perfectly normal and healthy," said Adam Sarhan, chief executive of 50 Park Investments in New York.
"If the selling gets worse then you'll see a rotation out of tech and into undervalued areas of the market like biotech or healthcare stocks or small-cap stocks."
At 10:04 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab fell 17.55 points, or 0.04%, to 44,904.72, the S&P 500 (.SPX), opens new tab lost 39.62 points, or 0.62%, to 6,371.75 and the Nasdaq Composite (.IXIC), opens new tab lost 272.45 points, or 1.28%, to 21,042.50.
The S&P 500 and the Nasdaq marked their worst session in over two weeks on Tuesday following a similar tech selloff.
Minutes from the Fed's July meeting, where interest rates were left unchanged, are expected at 2:00 p.m. ET. It could set the tone before the central bank's annual conference in Jackson Hole, Wyoming, between August 21 and 23.
Chair Jerome Powell is expected to speak on Friday and his remarks will be scrutinized for insight on monetary policy, even as investors price in a 25-basis-point interest rate cut in September, according to data compiled by LSEG.
Remarks from Governor Christopher Waller and Atlanta Fed President Raphael Bostic are expected later in the day.
Investors also monitored allegations that Fed Governor Lisa Cook was involved in mortgage fraud.
Earnings from big retailers, seen as a barometer for the health of the American consumer, are also in the spotlight this week as sentiment has taken a hit from concerns that tariffs could drive prices higher.
Target (TGT.N), opens new tab plunged 8.2% after the company named a new CEO and retained its annual forecasts that were lowered in May due to weak demand for the discretionary merchandise it sells.
Cosmetics giant Estee Lauder (EL.N), opens new tab fell 2.5% after tariff-related headwinds weighed on its annual profit forecast.
On the trade front, the Commerce Department slapped 50% import levies on more than 400 "derivative" steel and aluminum products.
Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE. Declining issues outnumbered advancers by a 1.61-to-1 ratio on the Nasdaq.
The S&P 500 posted 20 new 52-week highs and no new lows while the Nasdaq Composite recorded 17 new highs and 75 new lows.