NEW YORK CITY, RAW – Wall Street’s main indexes are mixed ahead of minutes from the Federal Reserve’s December meeting as investors swapped technology stocks for cyclicals that stand to benefit from a high interest rate environment.
Seven of the 11 major S&P sectors advanced in early trading with value-oriented energy, financials and materials shares leading the pack.
Tech titans Apple Inc Google-owner Alphabet Inc, Amazon.com, Meta Platforms and Microsoft Corp fell between 0.4 per cent and 1.2 per cent to weigh the most on the S&P 500 and the Nasdaq indexes.
Interest-rate sensitive growth shares were also under pressure from a recent rise in US Treasury yields, sparked by growing angst towards the prospect of interest rate hikes by the Fed to curb inflation.
The US central bank said last month it would end its pandemic-era bond buying in 2022, signalling at least three interest rate hikes for the year.
Minutes from the meeting were due later in the day.
“With interest rates expected to rise this year, there is a likelihood that tech stocks could end up feeling some more pressure,” said Sam Stovall, chief investment strategist at CFRA Research in New York.
“Investors would continue to rotate away from the growth categories and move more towards the value side of the equation.”
Salesforce.com Inc dropped 5.3 per cent after UBS lowered its rating on the stock to “neutral” from “buy”.
In early trading, the Dow Jones Industrial Average was up 21.33 points, or 0.06 per cent, at 36,820.98, the S&P 500 was down 5.97 points, or 0.12 per cent, at 4,787.57, and the Nasdaq Composite was down 85.91 points, or 0.55 per cent, at 15,536.81.
The ADP National Employment report showed private payrolls increased by 807,000 jobs last month, more than double of what economists polled by Reuters had forecast.
The report comes ahead of the Labor Department’s more comprehensive and closely watched employment data for December on Friday.
Peloton Interactive fell 0.5 per cent after JPMorgan cut its price target on the fitness firm’s stock on expectations of softer demand.
AT&T Inc rose 2.5 per cent after the US telecom company added 880,000 monthly paying phone subscribers in the fourth quarter.
Beyond Meat jumped 4.6 per cent after Yum Brands’ KFC said it would start selling plant-based fried “chicken” from the vegan meat maker across the United States for a limited time.
Meanwhile, Citigroup analysts said they now expect the S&P 500 index to touch 5,100 by the end of 2022 on the back of strong corporate earnings.
Advancing issues outnumbered decliners by a 1.51-to-1 ratio on the NYSE and by a 1.04-to-1 ratio on the Nasdaq.
The S&P index recorded 45 new 52-week highs and no new low while the Nasdaq recorded 50 new highs and 64 new lows.