All three major stock indexes notched their third straight daily declines, with the Dow ending three tenths of a percent lower
Wall Street ended lower on Wednesday after Federal Reserve Chairman Jerome Powell told lawmakers on Capitol Hill that more interest rate hikes were “a pretty good guess,” reinforcing the central bank’s commitment to taming inflation.
All three major stock indexes notched their third straight daily declines, with the Dow ending three tenths of a percent lower, the S&P 500 closing down half of a percent, and the Nasdaq sinking 1.2%.
Megacaps and tech-related shares weighed the most on the market, including AI-related stocks Microsoft and Nvidia.
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“A lot of these companies have gotten very far ahead of themselves from a valuation standpoint.”
Timothy Chubb is chief investment officer at Girard, a Univest Wealth Division.
“Certainly some of the technology companies related to AI have gotten overbought and their valuations are extremely expensive. But, you know, more broadly, I’d say even some of the largest, you know, ten, twenty companies within the S&P 500, the Nasdaq have just seen so much multiple expansion take place without the earnings growth following it. It really puts them in a vulnerable position, especially given just how crowded they’ve gotten.”
In testimony before the U.S. House Financial Services Committee, Fed Chair Jerome Powell said the central bank remains “strongly committed” to bringing inflation back down to its 2% target and said future rate hikes are in the cards if the economy continues on its current path.
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But traders are taking a more optimistic view, as interest rate futures pointed to just one more rate hike in 2023.
As for individual movers, Tesla was the biggest drag on the S&P 500, sliding roughly five and a half percent after Barclays downgraded its rating on the stock to “equal weight” from “overweight,” saying the recent rally in shares of Elon Musk’s EV maker was too sharp relative to fundamentals.
Shares of package delivery firms FedEx and UPS both dropped after FedEx posted disappointing quarterly earnings and said waning global demand is pressuring its profit margins.
And crypto firms, including Coinbase, rose as Bitcoin breached the $30,000 level.
