The Federal Reserve's hawkish remarks increased skepticism about an interest rate cut in December, and Wall Street's major indexes fell on Friday as technology firms faced fresh selling pressure.
The Dow Jones Industrial Average dropped 568.05 points, or 1.24%, to 46,889.17, the S&P 500 dropped 73.29 points, or 1.09%, to 6,664.20, and the Nasdaq Composite dropped 317.39 points, or 1.44%, to 22,552.96 at 9:36 a.m. ET.
The Nasdaq is headed for its fifth session of falls, the index's longest losing streak since April, as a result of worries over bloated AI stock valuations that have sparked multiple selloffs in recent weeks.
It was also on the verge of losing for a second week in a row. Joe Saluzzi, partner and co founder of Themis Trading, stated, "People have seen the overvaluation story, it has been there for a while, but they are finally acting on it momentum trade is starting to unwind."
"They're going to remove them all when it does go down as you're witnessing this morning. There isn't a safety trade there. Shares of Applied Materials fell 6.3% to the bottom of the S&P 500 following the company's announcement that stronger U.S. export control restrictions will likely result in poorer China investment next year.
The index as a whole lost 3%, while the majority of semiconductor related stocks declined. The Roundhill Magnificent Seven ETF had a 2% decline in megacap technology equities. The S&P 500's information technology stocks also saw a 2% decline.
The previous session had the biggest one-day drops in the three main U.S. stock indices in more than a month. Wall Street's fear barometer, the CBOE Volatility Index, was recently up 3 points at 23 after reaching a one week high earlier.
A rising number of Fed officials, meanwhile, expressed reluctance to implement additional easing. While Beth Hammack, the head of Cleveland, stated that tight policies will assist combat inflation, Alberto Musalem, the president of St. Louis, advised caution. Neel Kashkari of Minneapolis told Bloomberg News on Thursday that he had opposed the rate drop in October.
According to CME Group's FedWatch tool, expectations for a 25-point rate cut in December dropped from 67% last week to 53%.
Throughout the day, investors will sift through new remarks made by Fed officials. A lack of economic data caused by the record U.S. government shutdown, which ended on Thursday, left markets and the Fed in the dark and reignited worries about the state of the labor market and the prospects for inflation.
Despite the reopening, there will probably always be data gaps because the White House has questioned whether some reports for October would ever be made public.
Regarding commerce, the Swiss government said that American tariffs on Swiss products will drop from 39% to 15%. Among other things, Walmart experienced a 2.2% decline on the announcement that CEO Doug McMillon would step down in 2019. Warner Bros.
Discovery saw a 2.4% increase. In the midst of a strategic assessment of its operations, the entertainment corporation announced that it has modified CEO David Zaslav's employment contract.
Following Merck's announcement that it would purchase Cidara Therapeutics for about $9.2 billion, the company more than doubled.
On the NYSE and Nasdaq, declining issues outnumbered advancers by a ratio of 2.86 to 1 and 3.8 to 1, respectively. While the Nasdaq Composite had eight new highs and 186 new lows, the S&P 500 saw seven new 52 week highs and six new lows.
