Stock indexes fell on Wednesday ahead of the Federal Reserve’s decision on interest rates later in the day, while an upbeat outlook from Advanced Micro Devices lifted chipmakers.
The Dow Jones Industrial Average plummeted 327 points, or 1%, to 33,754, the Nasdaq slid 0.4% and the S&P 500 was down 0.5%.
The Fed is widely seen as raising its target interest rate by a quarter of a percentage point in its first policy meeting of the year, after the rapid increases in 2022 to tame decades-high inflation.
Investors will also parse Chair Jerome Powell’s news conference for clues on the trajectory of future rate hikes.
Money markets are betting on one more 25 basis point (bps) hike in March, and a terminal rate of 4.9% in June.
“Consensus is that the Fed is going to talk very hawkish today even though it’s only doing 25 basis points,” said Thomas Hayes, chairman at investment firm Great Hill Capital.
Recent readings have indicated that inflation is easing, with the Fed also looking at data that will determine the resilience of the labor market and the pace of wage growth.
Meanwhile, the ADP National Employment report showed fewer-than-expected private job additions in January, while another piece of data showed US job openings unexpectedly rose in December.
The readings came ahead of the Labor Department’s comprehensive report on nonfarm payrolls for January due on Friday.
Separately, data showed US manufacturing contracted further in January as higher interest rates stifled demand for goods.
Advanced Micro Devices added 7.1% as the semiconductor maker said it expects its business to improve in the second half of the year.
Snap tumbled 11.9% after the social media company said it expects current-quarter revenue to decline by as much as 10%.
Facebook parent Meta Platforms added 0.4% ahead of reporting fourth-quarter results after the bell.
Videogame publisher Electronic Arts slumped 11% on lowering its annual bookings forecast.
With nearly 200 companies in the S&P 500 having reported fourth-quarter earnings, about 70% have topped Wall Street expectations. Analysts now see earnings of S&P 500 firms declining 2.4% for the quarter, per Refinitiv estimates.