U.S. markets slumped on Tuesday following the release of a fresh economic report that affirmed red-hot inflation levels, sending tech stocks spiraling for the second trading session this week.
All three major indexes were down. The S&P 500 slid 34.67 points to 4,634.30, and the Dow dipped 105.26 points, falling -0.30% to 35,545.69. The tech-focused Nasdaq shed 175.64 points to 15,237.64
The Labor Department said wholesale prices soared by a record 9.6% in November from a year earlier, the fastest annual pace on record for the indicator and a sign inflation is likely to persist well into 2022.
With inflationary pressures on the rise, investors are bracing for a faster rollback of pandemic-era stimulus by the Federal Reserve, which commenced its two-day policy-setting meeting earlier today. The bank is expected to release its final monetary policy statement of 2021 with remarks from Federal Reserve Chair Jerome Powell Wednesday. An updated Summary of Economic Projections outlining individual members' outlooks for economic conditions and interest rates is set to accompany the statement.
Investors have anticipated a ramp up in the cessation of tapering as key figures point to more persistent levels of inflation but are weighing how aggressive the Fed may be in measures to curb it.
“We don’t believe he’s spooked, where he will have to move too fast,” People's United Advisors Executive vice president and chief investment officer John Traynor told Yahoo Finance live. “We’ll need to wait and see what kind of language comes out, but a quickening of the pace is certainly in the cards, and it’s certainly justified, but moving too fast and then moving too fast to raise rates would really upset the market.
Shares of Microsoft (MSFT) were down more than 3.38% at the end of the trading session, contributing to the Dow's losses. The software giant posted its biggest drop since last October, according to Bloomberg data, adding to yesterday's loss of nearly 1% at close.
Bank of America's monthly fund manager survey out Tuesday found investors are hoarding cash amid Omicron variant concerns and the threat of higher interest rates. The bank reported allocations to cash among investors jumped 14 percentage points in December from November. Fund managers were net 36% overweight cash, posting the highest exposure to the asset class since May 2020.
More economic data is set to come out of Washington this week. November retail sales, out on Wednesday, are expected to rise by 0.8%, according to Bloomberg consensus estimates. And November housing starts are forecasted to see a month-over-month increase of 3.3%.
Meanwhile, Morgan Stanley projects the U.S. unemployment rate will drop to 3% in 2022.
"It's stunning to see how much the rate has fallen in the last five months,” Morgan chief U.S. economist Michael Feroli told Yahoo Finance Live. “We expect that pace of decline to slow, but it doesn't take much to get below 4%, even with a tick up in the labor participation rate which has been depressed over the last year and a half."
4:00 p.m. ET: Stocks close lower ahead of key Fed decision
Here were the main moves in markets as of 4:00 p.m. ET:
S&P 500 (^GSPC): -34.67 (-0.74%) to 4,634.30
Dow (^DJI): -105.26 (-0.30%) to 35,545.69
Nasdaq (^IXIC): -175.64 (-1.14%) to 15,237.64
Crude (CL=F): -$0.87 (-1.22%) to $70.42 a barrel
Gold (GC=F): -$17.40 (-0.97%) to $1,770.90 per ounce
10-year Treasury (^TNX): +1.4 bps to yield 1.4380%
1:42 p.m. ET: Microcap satellite maker surges 500% in tiny IPO
Satellite service provider Sidus Space Inc. (SIDU) surged as much as 494% during its trading debut Tuesday in the second biggest first-day jump of 2021 listings, according to Bloomberg data.
The stock opened at $27 after pricing at $5 per share in its initial public offering on Monday. Sidus is a manufacturer of commercial satellites based in Cape Canaveral, Florida.
12:05 p.m. ET: Microsoft posts biggest drop since 2020
Shares of Microsoft (MSFT) were down more than 4% in midday trading, contributing to the Dow's losses as the broader markets edged lower.
The software giant posted its biggest drop since last October, according to Bloomberg data, adding to yesterday's loss of nearly 1% at close.
Separately, J.P. Morgan released fresh research on Tuesday that said investors overlook Microsoft's leading position in data management. Data platform solutions contributed to about 12% of Microsoft's total revenue in 1H21, up from roughly 10% in 2017, according to the bank's note, which also said much of the company's growth is driven by cloud data platforms that grew from about 3% of total revenue to about 7% in the same time period. J.P. Morgan expects this to be a key source of upside heading into 2022.
Microsoft had a year of stunning numbers that made it Yahoo Finance's company of the year. The tech heavy weight passed a $2 trillion market capitalization in June and reported a $176 billion surge in revenue — a nearly 20% year-over-year increase.
11:13 a.m. ET: Dow reverses comeback, shedding more than 100 points
Here were the main moves in markets as of 11:13 a.m. ET:
S&P 500 (^GSPC): -52.68 (-1.13%) to 4,616.29
Dow (^DJI): -121.43 (-0.34%) to 35,529.52
Nasdaq (^IXIC): -279.60 (-1.81%) to 15,133.68
Crude (CL=F): -$1.00 (-1.40%) to $70.29 a barrel
Gold (GC=F): -$12.10 (-0.68%) to $1,776.20 per ounce
10-year Treasury (^TNX): +2.6 bps to yield 1.4500%
11:01 a.m. ET: Meme-stock darling AMC extends decline
Shares of AMC Entertainment Holdings Inc. (AMC) were down 2.19%, trading at $22.73 a piece, though recouping some losses after falling as much as 11% at the open. The company was hit hard in Monday's sell-off along with other retail favorites, including Bed Bath & Beyond Inc. (BBY) and Tesla (TSLA).
The losses come as investors expect a rollback of pandemic-era stimulus by the Federal Reserve, putting risky assets and tech companies under pressure.
Retail investors comprise 20%-30% of trading volume, according to research from J.P. Morgan—a change from last year when these traders were seen as small-time market players.
10:17 a.m. ET: Dow turns green following tumble
Here were the main moves in markets as of 10:17 a.m. ET:
S&P 500 (^GSPC): -32.00 (-0.69%) to 4,636.97
Dow (^DJI): +16.28 (+0.05%) to 35,667.23
Nasdaq (^IXIC): -200.53 (-1.30%) to 15,212.75
Crude (CL=F): -$0.72 (-1.01%) to $70.57 a barrel
Gold (GC=F): -$13.10 (-0.73%) to $1,775.20 per ounce
10-year Treasury (^TNX): +3.9 bps to yield 1.4630%
9:30 a.m. ET: Markets open lower ahead of Fed decision
Here were the main moves in markets as of 9:30 a.m. ET:
S&P 500 (^GSPC): -36.88 (-0.79%) to 4,632.09
Dow (^DJI): -141.06 (-0.40%) to 35,509.89
Nasdaq (^IXIC): -217.32 (-1.39%) to 15,413.28
Crude (CL=F): -$0.92 (-1.29%) to $70.37 a barrel
Gold (GC=F): -$20.90 (-1.17%) to $1,767.40 per ounce
10-year Treasury (^TNX): +2.7 bps to yield 1.4510%
9:05 a.m. ET: Stock futures tick down
Here were the main moves in futures trading Tuesday morning:
S&P 500 futures (ES=F): -28.50 points (-0.64%), to 4,640.25
Dow futures (YM=F): -100 points (-0.28%), to 35,545
Nasdaq futures (NQ=F): -170 points (-1.06%) to 15,912
8:48 a.m. ET: Wholesale inflation surges 9.6%
Wholesale prices soared by a record 9.6% in November from a year earlier, the fastest annual pace on record for the indicator and a sign inflation pressures are likely to persist well into 2022.
The Labor Department reported Tuesday that its producer price index rose 0.8% in November after a 0.6% monthly gain in October. The figure, which measures inflation before it reaches consumers, marked the highest monthly reading in four months.
Food prices jumped 1.2% in November after falling 0.3% in October. Energy prices were up 2.6% after a 5.3% percent rise October.
7:07 a.m. ET: Stock futures mixed
Here were the main moves in markets in early trading Tuesday:
S&P 500 futures (ES=F): -8.25 points (-0.18%), to 4,660.5
Dow futures (YM=F): +22.00 points (0.06%), to 35,667
Nasdaq futures (NQ=F): -85.25 points (0.53%) to 15,996.75
6:00 p.m. Monday ET: Stock futures edge higher
Here were the main moves in markets in late trading on Monday:
S&P 500 futures (ES=F): +5.50 points (0.12%), to 4,674.25
Dow futures (YM=F): +46.00 points (0.13%), to 35,691
Nasdaq futures (NQ=F): +10.75 points (0.07%) to 16,092.75
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc