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Business

Wall St stumbles after weak data, hawkish Fed comments

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  • Fed’s Bullard, Mester back rate increases
  • U.S. retail sales drop in December
  • Indexes down: Dow 1.28%, S&P 1.07%, Nasdaq 0.78%

Jan 18 (Reuters) – Wall Street’s main indexes fell on Wednesday after weak economic data and hawkish comments from Federal Reserve officials sparked worries that the central bank may not pause interest rate hikes any time soon.

Before the market opened, U.S. economic data showed retail sales and producer prices declined more than expected in December. Also production at U.S. factories fell more than expected in December and output in the prior month was weaker than previously thought.

With Wall Street’s major averages showing gains so far for 2023, Sam Stovall, chief investment strategist at CFRA research, said some investors saw the week data as an opportunity to take profits while others worried about the prospects for a recession.

“The market was overbought. Today’s economic data served as a trigger to initiate a profit taking spell and the groups with most profits to take have been the ones that have done best last year,” said Stovall.

By 2:14PM ET, the Dow Jones Industrial Average (.DJI) fell 434.27 points, or 1.28%, to 33,476.58, the S&P 500 (.SPX) lost 42.57 points, or 1.07%, to 3,948.4 and the Nasdaq Composite (.IXIC) dropped 87.02 points, or 0.78%, to 11,008.10.

The weakest sectors on the day are the defensive consumer staples (.SPLRCD), down more than 2%, and utilities (.SPLRCU), which was last down 1.8%.

The benchmark S&P and the blue-chip Dow were both on track for their second straight day of losses, while the Nasdaq, if it ends lower, would snap a seven-day winning streak.

U.S. stocks had started 2023 on a strong footing, with the S&P having closed up almost 4% year-to-date on Tuesday, on hopes that a moderation in inflationary pressures could give the Fed cover to dial down the size of its interest rate hikes.

Roughly halfway through January, the S&P was up 2.7% for the month so far while the Nasdaq was up more than 5% and the Dow, the best performer of the three for 2022, was up 0.9%.

Earlier, St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester stressed on the need to raise rates beyond 5% to bring inflation to heel.

The Fed commentary also highlighted the disparity between the U.S. central bank’s estimate of its terminal rate and market expectations, which were of the rate peaking at 4.88% by June. Traders are now betting on a 25-basis point rate hike in February.

“This market is very hopeful that we’re going to get a soft landing and every time you have hawkish comments from the Fed, it feels you’re not going to get that,” Dennis Dick, trader at Triple D Trading.

Investors are also focused on the fourth-quarter earnings season as a window into how corporate America is doing against the backdrop of higher interest rates.

Analysts now expect year-over-year earnings from S&P 500 companies to decline 2.6% for the quarter, according to Refinitiv data, compared with a 1.6% decline in the beginning of the year.

IBM Corp (IBM.N) was down 2.6% after Morgan Stanley downgraded the company’s shares to “equal weight” from “overweight”.

Early gainers Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O) erased gains by late afternoon trading with Microsoft down 1.2% and Tesla off 2.7%.

Moderna Inc (MRNA.O) rose 3.6% after reporting data which demonstrated the effectiveness of its respiratory syncytial virus (RSV) vaccine.

PNC Financial Services Group Inc (PNC.N) was down 5.4% after the company missed estimates for fourth-quarter profit.

Declining issues outnumbered advancing ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.66-to-1 ratio favored decliners.

The S&P 500 posted 9 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 71 new highs and 14 new lows.

Reporting by Sinéad Carew in New York, Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Additional reporting by Shubham Batra; Editing by Shounak Dasgupta and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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Technology

Apple indefinitely postpones launch of AR glasses – Bloomberg News

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Jan 17 (Reuters) – Apple Inc (AAPL.O) has postponed the launch of its lightweight augmented-reality glasses indefinitely due to technical challenges, but is still planning to unveil its first mixed-reality headset this year, Bloomberg News reported on Tuesday.

The iPhone maker’s mixed-reality headset – which combines both augmented and virtual reality – is set to launch in this year’s spring event, Bloomberg said, adding that the device will cost around $3,000.

Apple’s mixed-reality device would compete with the likes of Meta Platforms’ (META.O) Quest Pro virtual and mixed-reality headset, which it launched late last year for $1,500, half of the Apple device’s reported price.

The Cupertino, California-based company now plans to focus on lowering the price of the follow-up version of its mixed-reality device, expected as soon as 2024 or early 2025, instead of working on the AR glasses, according to the report.

Apple will aim to do so by using chips on par with those in the iPhone rather than components found in higher-end Mac computers.

Apple did not immediately respond to a Reuters request for comment.

The Information website first reported Apple’s plans to unveil a cheaper mixed-reality headset on Tuesday.

earlier in the day, the iPhone maker unveiled MacBooks powered by its new and faster M2 Pro and M2 Max chips in a surprise launch weeks ahead of its usual schedule.

Reporting by Kanjyik Ghosh and Shubham Kalia in Bengaluru; Editing by Janane Venkatraman

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Technology

Microsoft faces EU antitrust warning over Activision deal – sources

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BRUSSELS, Jan 16 (Reuters) – Microsoft (MSFT.O) is likely to receive an EU antitrust warning about its $69 billion bid for “Call of Duty” maker Activision Blizzard (ATVI.O), people familiar with the matter said, that could pose another challenge to completing the deal.

The European Commission is readying a charge sheet known as a statement of objections setting out its concerns about the deal which will be sent to Microsoft in the coming weeks, the people said.

The EU antitrust watchdog, which has set an April 11 deadline for its decision on the deal, declined to comment.

Microsoft said: “We’re continuing to work with the European Commission to address any marketplace concerns. Our goal is to bring more games to more people, and this deal will further that goal.”

The U.S. software giant and Xbox maker announced the acquisition in January last year to help it compete better with leaders Tencent (0700.HK) and Sony (6758.T).

U.S. and UK regulators, however, have voiced concerns, with the U.S. Federal Trade Commission going to court to block the deal.

Microsoft was expected to offer remedies to EU regulators in an attempt to avert a statement of charge and shorten the regulatory process, other sources familiar with the matter told Reuters in November.

The EU competition enforcer, however, is not expected to be open to remedies without first sending out its charge sheet, although there are ongoing informal discussions on concessions, the people said.

Microsoft last month reached a 10-year deal with Nintendo (7974.T) to make “Call of Duty” available on Nintendo consoles, saying it was open to a similar agreement with Sony, which is critical of the acquisition.

The deal has received the green light without conditions in Brazil, Saudi Arabia and Serbia.

Reporting by Foo Yun Chee
Editing by Mark Potter

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Business

Wall Street ends higher, Powell comments avoid rate policy

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  • Investors await CPI data Thursday
  • U.S. earnings season begins this week
  • Jefferies shares rise after results
  • Indexes: Dow up 0.6%, S&P 500 up 0.7%, Nasdaq up 1%

NEW YORK, Jan 10 (Reuters) – U.S. stocks ended solidly higher on Tuesday, led by a 1% gain in the Nasdaq, on relief that Federal Reserve Chair Jerome Powell refrained in a speech from commenting on rate policy.

In his first public appearance of the year, Powell said at a forum sponsored by the Swedish central bank that the Fed’s independence is essential for it to battle inflation.

Recent comments by other Fed officials have supported the view that the central bank needs to remain aggressive in raising interest rates to control inflation. Fed Governor Michelle Bowman said on Tuesday the bank will have to raise interest rates further to combat high inflation.

“Everybody hangs on every word from the Fed,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. Powell “didn’t really say anything” about policy, he added.

Investors anxiously awaited the U.S. consumer prices index report Thursday, which is expected to show some moderation in year-on-year prices in December.

Traders are betting on a 25-basis point rate hike at the Fed’s upcoming policy meeting in February.

“There are some indications that inflation is slowing significantly. What investors are really looking for is a gap down in major inflation data that could probably get the Fed’s attention,” Ghriskey said.

Amazon.com Inc. (AMZN.O) shares rose 2.9% and gave the Nasdaq and S&P 500 their biggest boosts.

The Dow Jones Industrial Average (.DJI) rose 186.45 points, or 0.56%, to 33,704.1; the S&P 500 (.SPX) gained 27.16 points, or 0.70%, at 3,919.25; and the Nasdaq Composite (.IXIC) added 106.98 points, or 1.01%, at 10,742.63.

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

Shares of Microsoft Corp (MSFT.O) rose 0.8%, a day after Semafor, citing people familiar with the matter, reported that the tech company was in talks to invest $10 billion in ChatGPT-owner OpenAI.

Communications services (.SPLRCL) was the day’s best-performing sector, while energy (.SPNY) rose along with oil prices.

This week marks the start of the fourth-quarter earnings season for S&P 500 companies, with results from several of Wall Street’s biggest banks due later this week.

Shares of investment bank Jefferies Financial Group (JEF.N) rose 3.8% on Tuesday, a day after it posted its second-best year for investment banking revenue. It also reported a 52.5% slump in fourth-quarter profit.

Analysts expect overall S&P 500 earnings to have declined 2.2% in the fourth quarter from a year ago, according to IBES data from Refinitiv, as worries about rising rates and the economy mounted.

Some investors are hoping for signs that the Fed may soon take a break after raising the federal funds rate seven times in 2022.

The World Bank on Tuesday slashed its 2023 growth forecasts on Tuesday to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies.

Volume on U.S. exchanges was 10.02 billion shares, compared with the 10.91 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 2.33-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted four new 52-week highs and no new lows; the Nasdaq Composite recorded 71 new highs and 30 new lows.

Additional reporting by Ankika Biswas, Amruta Khandekar and Johann M Cherian in Bengaluru; Editing by Shinjini Ganguli, Shounak Dasgupta and Richard Chang

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Business

S&P 500 near flat as investors weigh chances of less aggressive rate hikes

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  • Tech shares gain
  • Macy’s, Lululemon drop on holiday-quarter warnings
  • Indexes: Dow down 0.3%, S&P 500 down 0.1%, Nasdaq up 0.6%

NEW YORK, Jan 9 (Reuters) – The S&P 500 index (.SPX) erased early gains to close nearly flat on Monday as expectations that the Federal Reserve will become less aggressive with its interest rate hikes were offset by lingering worries about inflation.

The Dow ended lower, and the Nasdaq Composite (.IXIC) ended well off the day’s highs.

Investors are awaiting comments Tuesday from Fed Chair Jerome Powell, who some strategists expect could say more time is needed to show inflation is under control.

Money market bets were showing 77% odds of a 25-basis point hike in the Fed’s February policy meeting.

A consumer prices report due Thursday could be key for rate expectations, said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina. “The CPI report this week is going to be essential for fine-tuning the Fed funds futures market.”

Investors also may have sold some shares after recent strong market gains, said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “You’re seeing a little bit of profit-taking ahead of the CPI number due out this week.”

The technology sector (.SPLRCT) gained as Treasury yields fell. Consumer discretionary stocks (.SPLRCD) also rose, with Amazon.com Inc (AMZN.O) up 1.5% after Jefferies said it saw cost pressures easing for the e-commerce giant in the second half of the year.

Also, S&P 500 companies are about to kick off the fourth-quarter earnings period, with results from top U.S. banks expected later this week.

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 5, 2023. REUTERS/Andrew Kelly

The Dow Jones Industrial Average (.DJI) fell 112.96 points, or 0.34%, to 33,517.65, the S&P 500 (.SPX) lost 2.99 points, or 0.08%, to 3,892.09 and the Nasdaq Composite (.IXIC) added 66.36 points, or 0.63%, to 10,635.65.

Shares of Broadcom Inc (AVGO.O) fell in late trading to end down 2% after Bloomberg, citing people familiar with the matter, reported that Apple Inc (AAPL.O) plans to drop a Broadcom chip in 2025 and use an in-house design instead.

Friday’s jobs report, which showed a moderation in wage increases, lifted hopes that the Fed might become less aggressive in its rate-hike push to reduce inflation.

Tesla Inc (TSLA.O) shares rose 5.9% after the electric-vehicle maker indicated longer waiting times for some versions of the Model Y in China, signaling the recent price cuts could be stoking demand.

Macy’s Inc (M.N) fell 7.7% and Lululemon Athletica Inc (LULU.O) dropped 9.3% after both retailers issued disappointing holiday-quarter forecasts.

Volume on U.S. exchanges was 11.35 billion shares, compared with the 10.90 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered decliners on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and two new lows; the Nasdaq Composite recorded 129 new highs and 32 new lows.

Additional reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

Dell looks to phase out China-made chips by 2024 – Nikkei

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Jan 5 (Reuters) – Dell Technologies Inc (DELL.N) plans to stop using China-made chips by 2024 and has told suppliers to reduce the amount of other made-in-China components in its products amid concerns over U.S.-Beijing tensions, the Nikkei reported on Thursday.

The news comes after the United States added Chinese memory chipmaker YMTC and 21 “major” companies in the country’s artificial intelligence chip sector to a trade blacklist in December.

PC maker HP Inc (HPQ.N), one of Dell’s rivals, has also started surveying its suppliers to gauge the feasibility of moving production and assembly away from China, the report said, citing sources with knowledge of the matter.

Dell has also asked product assemblers and suppliers of other components such as electronic modules and print circuit boards to help prepare capacity in countries beyond China, such as Vietnam, the report said.

“We continuously explore supply-chain diversification across the globe that makes sense for our customers and our business,” Dell said in a statement.

HP did not immediately respond to a Reuters request for comment.

In October last year, the Biden administration published a set of export controls that included a measure to cut China off from certain semiconductor chips made anywhere in the world with U.S. tools.

Reporting by Kanjyik Ghosh in Bengaluru, additional reporting by Tiyashi Datta; Editing by Janane Venkatraman and Devika Syamnath

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Technology

Sony, Honda roll out prototype of ‘Afeela’ EV that uses Qualcomm tech

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Jan 4 (Reuters) – Japan’s Sony (6758.T) on Wednesday unveiled a prototype of the new “Afeela” electric vehicles it will build together with Honda (7267.T), saying it would harness its vast entertainment content as it looks to become a player in next-generation cars.

Sony gave a glimpse of the Afeela, which sports rounded corners and a sleek black roof, at the CES 2023 technology trade show in Las Vegas. The car will use technology from hardware maker Qualcomm Inc (QCOM.O), including its “Snapdragon” digital chassis.

Sony’s long-awaited push into electric vehicles – it announced the venture with Honda in March – shows how manufacturers are increasingly focused on the cockpit experience in cars, which offers the potential to sell content via subscription services cars, especially as autonomous driving capabilities improve.

“In order to realise intelligent mobility, continuous software updates and high-performance computing are required,” Yashuhide Mizuno, the chief executive of Sony Honda Mobility, told the trade show. “To that end, we will work closely with Qualcomm.”

Qualcomm on Wednesday launched a new processor, the Snapdragon Ride Flex SoC, that handles both assisted driving and cockpit functions, including entertainment. Previously those functions were handled on different chips, and bringing them together can help bring down costs, a Qualcomm executive told Reuters.

Sony is also looking to harness its traditional strengths in sensors. The Afeela will be equipped with more than 40 sensors, Mizuno said. The car will use the “Unreal Engine” 3-D creation tool from Epic Games, the maker of the “Fortnite” series of games.

For Honda, the venture with Sony may allow it to speed up what has so far been a slow shift to electric. It has also struggled over the years to make gains in the luxury vehicle market with its Acura brand. The new EV will be priced at a premium, the venture has said.

The venture between Sony Group Corp and Honda Motor Co Ltd aims to deliver its first electric vehicles by early 2026 in North America.

Shares of Sony were up 1.6% in Tokyo trade, while Honda shares were flat. The benchmark Nikkei 225 (.N225) was little changed.

Reporting by Kiyoshi Takenaka; Additional reporting by Jane Lanhee Lee in San Francisco; Writing by David Dolan; Editing by Chang-Ran Kim and Muralikumar Anantharaman

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Business

Wall St starts the year with a dip; Apple, Tesla shares drag

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Jan 3 (Reuters) – Wall Street’s main indexes closed lower on the first trading day of 2023 with big drags from Tesla and Apple, while investors worried about the Federal Reserve’s interest-rate hiking path as they awaited minutes from its December meeting.

Shares in electric vehicle maker Tesla Inc (TSLA.O) hit their lowest level since August 2020 and put pressure on the consumer discretionary sector (.SPLRCD) after missing Wall Street estimates for quarterly deliveries.

Apple Inc (AAPL.O) shares sank, with the iPhone maker hitting its lowest level since June 2021, after a report from Nikkei Asia pointed to weaker demand. In addition, an analyst downgraded their rating of the stock due to production cuts in COVID-19-hit China.

The energy sector (.SPNY), which logged stellar gains in 2022, started the year in the red as oil prices fell on bleak business activity data from China and concerns about the outlook for the global economy. .

The main U.S. stock indexes had ended 2022 with their steepest annual losses since 2008 following the Fed’s fastest pace of rate hikes since the 1980s to stamp out decades-high inflation.

“Even though the calendar has changed, a lot of the main issues for the market have not, specifically with the Federal Reserve tightening monetary policy as it’s still concerned about inflation,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.

“We’re in a bear market. Negative is the default reaction to everything,” he said. “Until the Fed really changes their tone, it’s an uphill battle for the market.”

Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, also cited worries about Apple’s demand stemming as well as Tesla’s sharp decline for the broader market’s weakness on Tuesday.

According to preliminary data, the S&P 500 (.SPX) lost 15.43 points, or 0.40%, to end at 3,824.07 points, while the Nasdaq Composite (.IXIC) lost 78.21 points, or 0.75%, to 10,388.28. The Dow Jones Industrial Average (.DJI) fell 12.33 points, or 0.04%, to 33,134.92.

The S&P 500 had shed 19.4% in 2022, marking a roughly $8 trillion decline in market capitalization, while the Nasdaq fell 33.1%, dragged down by growth stocks.

Investors on Wednesday will closely monitor the minutes of the Fed’s December policy meeting, when the central bank raised interest rates by 50 basis points after four straight 75 basis points hikes and signaled rates could stay higher for longer.

Other economic data due this week includes the ISM manufacturing report, also on Wednesday, and December’s jobs report on Friday.

Weakness in the labor market could give the Fed a reason to ease its monetary policy tightening, but the data so far has shown that market remains tight despite rate hikes.

Money market participants see a 68% chance the Fed will raise the benchmark rate by 25 basis points to 4.50% to 4.75% in February, with the rates peaking at 4.98% by June. .

Reporting by Sinéad Carew in New York; Shubham Batra, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and Jonathan Oatis

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World

U.S. stocks drop on recession fears, Nasdaq closes at new bear market low

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  • Tesla gains 3.3% in choppy trade
  • Southwest Airlines slips 5.2% on government scrutiny
  • Indexes down: Dow 1.1%, S&P 500 1.20%, Nasdaq 1.35%

Dec 28 (Reuters) – Wall Street’s main indexes ended weaker on Wednesday, with the Nasdaq hitting a 2022 closing low, as investors grappled with mixed economic data, rising COVID cases in China, and geopolitical tensions heading into 2023.

The Nasdaq Composite (.IXIC) ended at 10,213.288, the lowest since the bear market began in November 2021 after the index hit a record high. The last time the Nasdaq ended lower was in July 2020. Its previous closing low for 2022 was 10,321.388 on Oct. 14.

“There was no Santa rally this year. The Grinch showed up this December for investors,” said Greg Bassuk, chief executive at AXS Investments in Port Chester, New York.

December is typically a strong month for equities, with a rally in the week after Christmas. The S&P 500 index (.SPX) has posted only 18 Decembers with losses since 1950, Truist Advisory Services data show.

“Normally a Santa Claus Rally is sparked by hopes of factors that will drive economic and market growth,” Bassuk said. “The negative and mixed economic data, greater concerns around COVID reemergence and ongoing geopolitical tensions and … all of that also translating Fed policy is all impeding Santa (from) showing up at the end of this year.”

All 11 of the S&P 500 (.SPX) sector indexes fell on Wednesday. Energy stocks (.SPNY) were the biggest losers, dipping over 2.2% as worries over demand in China weighed on oil prices.

Investors have been assessing China’s move to reopen its COVID-battered economy as infections surged.

“With this current combination of rising cases with an opening up of China restrictions, we’re seeing that investors are concerned that the ramifications are going to spread through many different industries and sectors as it did in the earlier COVID period,” Bassuk said.

The benchmark S&P 500 (.SPX) is down 20% year-to-date, on track for its biggest annual loss since the financial crisis of 2008. The rout has been more severe for the tech-heavy Nasdaq Composite (.IXIC), which closed at the lowest level since July 2020.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. REUTERS/Brendan McDermid

While recent data pointing to an easing in inflationary pressures has bolstered hopes of smaller interest rate hikes by the Federal Reserve, a tight labor market and resilient American economy have spurred worries that rates could stay higher for longer.

Markets are now pricing in 69% odds of a 25-basis point rate hike at the U.S. central bank’s February meeting and see rates peaking at 4.94% in the first half of next year. .

Shares of Tesla Inc (TSLA.O) gained 3.3% in choppy trade, a day after hitting the lowest level in more than two years. The stock is down nearly 69% for the year.

Southwest Airlines Co (LUV.N) dropped 5.2% a day after the carrier came under fire from the U.S. government for canceling thousands of flights.

Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) fell between 1.5% and 3.1% as the U.S. 10-year Treasury yield recovered from a brief fall to rise for a third straight session.

The Dow Jones Industrial Average (.DJI) fell 365.85 points, or 1.1%, to 32,875.71; the S&P 500 (.SPX) lost 46.03 points, or 1.20%, at 3,783.22; and the Nasdaq Composite (.IXIC) dropped 139.94 points, or 1.35%, to 10,213.29.

Declining issues outnumbered advancers on the NYSE by a 3.77-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favored decliners.

The S&P 500 posted seven new 52-week highs and seven new lows; the Nasdaq Composite recorded 75 new highs and 421 new lows.

Volume on U.S. exchanges was 8.59 billion shares, compared with the 11.3 billion average for the full session over the last 20 trading days.

Reporting by Echo Wang in New York; Additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Sriraj Kalluvila, Anil D’Silva and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

Tesla, megacap growth stocks pull Nasdaq lower; Dow rises

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  • Tesla slumps on report of reduced output plan
  • China ADRs rise on reopening optimism
  • Indexes mixed: Dow up 0.40%, S&P down 0.11%, Nasdaq down 0.80%

Dec 27 (Reuters) – The tech-heavy Nasdaq came under pressure on Tuesday following declines in some megacap growth stocks and Tesla, while optimism around an economic recovery in China after the country further eased its COVID-19 curbs helped cap losses.

Tesla Inc (TSLA.O) tumbled 8.1% to hit a more than two-year low after Reuters reported that the electric vehicle maker plans to run a reduced production schedule at its Shanghai plant into January. The stock has lost more than two-thirds of its value this year.

Megacap growth stocks Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) slipped between 1% and 1.5% as U.S. Treasury yields rose.

The declines made consumer discretionary (.SPLRCD) and technology (.SPLRCT) the worst performers among major S&P 500 (.SPX) sector indexes.

However, sectors closely tied to the economy, such as industrials (.SPLRCI), materials (.SPLRCM) and energy (.SPNY), advanced, helping the Dow Jones (.DJI) to eke out gains.

“What you’re seeing is a battle between investors who are doing year-end tax selling and investors that believe that normal inflows in January will lead to a better market,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Meckler also pointed to thin trading volumes playing its part in market volatility.

Growth stocks have been under pressure this year from a rise in U.S. Treasury yields after the Federal Reserve embarked on an aggressive interest rate hike campaign to tame a surge in inflation, with investors turning to high dividend-yielding value stocks such as energy.

The S&P 500 growth index (.IGX) has tumbled 30% this year, compared with a 7% drop for the value index (.IVX).

U.S.-listed shares of Chinese firms such as JD.Com Inc , Alibaba Group Holding Ltd and Pinduoduo Inc (PDD.O) climbed between 2% and 3.8% after China said it would stop requiring inbound travelers to go into quarantine starting Jan. 8.

Investors are hoping for a so-called “Santa rally” at the end of what has been a largely disappointing month for U.S. equities.

The S&P 500 (.SPX) and the Nasdaq (.IXIC) have lost around 5.7% and 9% so far in December and are on track for their biggest yearly loss since 2008 as the monetary policy tightening sparked worries of the economy tipping into a recession.

Economic data so far has offered little hope. Inflation has cooled further, but not enough to discourage the U.S. central bank from driving interest rates to higher levels next year.

Money markets are pricing in 59% odds of a 25-basis-point interest rate hike at the Fed’s February meeting and expect rates peaking at 4.98% in May. .

At 11:52 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 133.48 points, or 0.40%, at 33,337.41, the S&P 500 (.SPX) was down 4.22 points, or 0.11%, at 3,840.60, and the Nasdaq Composite (.IXIC) was down 83.89 points, or 0.80%, at 10,413.97.

Southwest Airlines Co (LUV.N) shed 4.9% after cancelling thousands of flights, piling more pressure on the S&P 500.

Declining issues outnumbered advancers for a 1.01-to-1 ratio on the NYSE and 1.43-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and three new lows, while the Nasdaq recorded 61 new highs and 311 new lows.

Reporting by Amruta Khandekar and Ankika Biswas in Bengaluru;
Editing by Vinay Dwivedi and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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