Wall Street falls after two-week rally; eyes on Fed meeting

  • Shares of Apple, other megacaps weigh
  • Global Payments down on weak forecast
  • Dow poised for biggest monthly percentage gain since 1976
  • Dow down 0.16%, S&P 500 down 0.49%, Nasdaq down 0.73%

NEW YORK, Oct 31 (Reuters) – U.S. stocks fell on Monday, with the major indexes poised to close out a strong month on a soft note, as investor focus turned to the Federal Reserve’s policy meeting this week.

The central bank is widely expected to raise interest rates by 75 basis points on Wednesday at the conclusion of its two-day policy meeting, but investors will look for any clues the Fed may be considering a deceleration in interest rate hikes in the future.

Hopes the Fed may pull back from its aggressive interest rate hike policy have lifted equities in recent weeks, with the S&P 500 notching a gain of nearly 9% over the past two weeks. The Dow was on track for its biggest monthly percentage gain since January 1976. Comments from Fed officials after the policy decision as well as labor market data later this week will help shape market expectations for future hikes.

“Today is just a reaction to what happened last week, we had a profound move in the market last week on the upside…so it makes sense that we certainly have to back and fill today,” said Eric Diton, president and managing director at The Wealth Alliance in Boca Raton, Florida.

“We will wait and see and maybe the Fed meeting will give us some direction. November is a fait accompli; 75 basis points is baked in. Their goal is not to surprise the markets.

The Dow Jones Industrial Average (.DJI) fell 53.61 points, or 0.16%, to 32,808.19, the S&P 500 (.SPX) lost 19.06 points, or 0.49%, to 3,882 and the Nasdaq Composite (.IXIC) dropped 81.52 points, or 0.73%, to 11,020.93.

Apple Inc (AAPL.O) lost 1.12% after a Reuters report said production of its iPhones could slump by as much as 30% next month due to tightening COVID-19 curbs in China.

Megacap growth names, Amazon.com (AMZN.O) and Google-owner Alphabet (GOOGL.O), which have been under pressure in the rising rate environment, were also lower and lost 0.84% and 1.63%, respectively.

Nearly all 11 S&P 500 sectors fell, with information technology (.SPLRCT) and communication services (.SPLRCL) the worst performers with declines of more than 1%. Energy gained 1.16% ahead of remarks on oil companies by U.S. President Joe Biden later today.

Energy firms such as Chevron (CVX.N) and Exxon Mobil (XOM.N) have blown past profit estimates this quarter, benefiting from surging energy prices, in contrast to Big Tech firms that have largely disappointed investors.

“Dividend stocks, energy, stuff that is short duration, industrials – they pay you back, they are giving you money back to reinvest into the markets at higher rates…That is what is working,” said Diton.

With around half of the companies in the S&P 500 having reported their quarterly results so far, third-quarter earnings growth estimates stands at 4%, according to Refintiv data, slightly lower than the 4.1% last week.

Global Payments Inc (GPN.N) fell 7.76% after the company forecast full-year revenue below estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.11-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.

The S&P 500 posted 22 new 52-week highs and seven new lows; the Nasdaq Composite recorded 110 new highs and 94 new lows.

Reporting by Chuck Mikolajczak; Editing by Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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