Thomson Reuters
- US stocks dropped Wednesday as fears of more Fed rate hikes swirled.
- Boston Fed President Susan Collins warned that more policy tightening could still be on the table.
- Meanwhile, the Fed's Beige Book showed softer activity growth and cooling labor market in July and August.
US stocks fell on Wednesday as Big Tech names like Apple and Nvidia dragged major indexes lower.
Fears of more potential rate hikes from the Federal Reserve swirled following early morning comments from Boston Fed President Susan Collins.
"Overall, we are well positioned to proceed cautiously in this uncertain economic environment, recognizing the risks while remaining resolute and data-dependent, with the flexibility to adjust as conditions warrant," Collins said in a statement.
She noted that "further tightening could be warranted."
The August ISM services data released Wednesday, a barometer of business conditions in the service sector, showed that prices increased to the highest level since February. The index jumped from a reading 52.7 to 54.5 compared to the prior month. Economists polled by the Wall Street Journal had expected a decline to 52.5.
"The two big challenges facing the Fed right now are the risks that inflation could become entrenched and the risks that the consumer could falter when excess savings dry up," Jeffrey Roach, chief economist for LPL Financial, said. "Given the data, the Fed will most likely deliver a hawkish pause at the next meeting. The hard data is not yet convincing enough to establish strong views about the subsequent meetings. Investors should still find opportunities in the market but it could be a bumpy ride."
Separately, the Fed's Beige book release on Wednesday showed slower activity growth and softer hiring in the labor market through July and August.
"Most districts reported price growth slowed overall, decelerating faster in manufacturing and consumer-goods sectors," according to the Beige Book, which is released two weeks ahead of each FOMC meeting. "However, contacts in several districts highlighted sharp increases in property-insurance costs during the past few months."
Here's where US indexes stood as the market closed 4:00 p.m. on Wednesday:
- S&P 500: 4,465.61, down 0.69%
- Dow Jones Industrial Average: 34,444.38, down 0.57% (-197.59 points)
- Nasdaq Composite: 13,872.47, down 1.06%
Here's what else is going on:
- The Fed's balance sheet reductions have hit $1 trillion.
- Ozempic maker Novo Nordisk has overtaken LVMH to become the biggest company in Europe.
- The maker of Wilson tennis rackets is planning to IPO in a deal that could reportedly value the company at $10 billion.
- China Evergrande stock soared 70% to lead other Chinese property names higher.
- Apple stock dropped as EU regulators tightened the screws and China banned iPhones for government workers.
- The share of Americans paying over $2,000 a month for a mortgage has nearly tripled in two years.
- WeWork says it will renegotiate nearly all of its leases, and it's another sign that commercial real estate is in trouble.
- The stock market could see a big September sell-off on these 7 risks, according to Ed Yardeni.
In commodities, bonds, and crypto:
- Oil prices climbed, with West Texas Intermediate up 1.11% to $87.65 a barrel. Brent crude, the international benchmark, rose 0.77% to $90.73 a barrel.
- Gold moved lower 0.55% to $1,941.70 per ounce.
- The 10-year Treasury yield ticked higher by three basis points to 4.298%.
- Bitcoin dropped 0.40% to $25,607.