US STOCKS-Wall St drops as treasury yields drag megacaps; inflation data eyed
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Juniper Networks jumps on likely $13-bln buyout by HPE
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Netflix drops on Citi rating downgrade
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Bias remains for policy to stay tight - Atlanta Fed's Bostic
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Indexes down: Dow 0.62%, S&P 0.54%, Nasdaq 0.65%
(Updated at 9:37 a.m. ET/ 1437 GMT)
By Johann M Cherian and Ankika Biswas
Jan 9 (Reuters) -
Wall Street's main indexes fell on Tuesday, with megacaps under pressure from rising Treasury yields and traders scaling back expectations for an early start to interest-rate cuts ahead of key inflation reports due later this week.
Megacap stocks Microsoft, Apple, Tesla and Amazon.com shed between 0.8% and 2%, with yields on shorter- and longer-dated U.S. Treasury notes ticking over 4%.
Nvidia, too, slipped 0.7% after closing at a record high on unveiling new artificial intelligence components.
The weakness follows a strong session for Wall Street on Monday, during which the tech-heavy Nasdaq jumped over 2% to log its best day since November. The benchmark S&P 500 also drew near its highest closing level hit two years ago.
"Valuations for a lot of those companies (large tech and the magnificent 7) are growing fairly strongly... but revenue growth over the last two to five years has been coming down," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest, who expects these firms to underperform this year.
Real estate and materials stocks, down around 1% each, were the worst hit among the major S&P 500 sectors.
Data on consumer and producer inflation, expected on Thursday and Friday, respectively, will be crucial for clues on the Federal Reserve's monetary policy trajectory.
"The Fed will not be aggressive in cutting rates because inflation will stay somewhat elevated and economic growth will remain reasonably strong," Nolte said.
Market participants see a 58% chance the Fed could slash rates by at least 25 basis points in March, as per the CME Group's FedWatch Tool, down from nearly 64% on Monday, after mixed signals from policymakers on the timing of rate cuts.
Atlanta Fed President Raphael Bostic, on Monday, stressed the need to keep monetary policy tight, while Fed Governor Michelle Bowman retreated from her persistently hawkish view and signaled a willingness to support eventual rate cuts as inflation eases.
On the day, investors will parse Fed Vice Chair for Supervision Michael Barr's remarks for his perspectives on the policy outlook.
Quarterly earnings on Friday from JPMorgan Chase, Wells Fargo, Bank of America and Citigroup will also provide insights into the health of corporate America.
At 9:37 a.m. ET, the Dow Jones Industrial Average was down 232.22 points, or 0.62%, at 37,450.79, the S&P 500 was down 25.67 points, or 0.54%, at 4,737.87, and the Nasdaq Composite was down 96.80 points, or 0.65%, at 14,746.97.
Boeing lost 1.9%, down for the second day as the U.S. National Transportation Safety Board continued its probe into a recent mishap.
Juniper Networks surged 22.3% after a source told Reuters that Hewlett Packard Enterprise was in talks to buy the networking product maker in a $13-billion deal. The server maker dropped 8.2%.
Netflix lost 1.6% after brokerage Citigroup downgraded the streaming platform to "neutral" from "buy".
Declining issues outnumbered advancers for a 5.26-to-1 ratio on the NYSE and a 3.16-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and no new lows, while the Nasdaq recorded 24 new highs and 13 new lows. (Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Pooja Desai)
