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Wall St ends lower after recent strong gains, Alphabet shares sink


2023-02-08T21:03:18Z

Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 27, 2023. REUTERS/Andrew Kelly

U.S. stocks ended down on Wednesday, paring most of the strong gains of the previous session, with tech-focused shares leading the way lower.

The biggest drag on the S&P 500 and Nasdaq was Alphabet (GOOGL.O), whose shares dropped after its new AI chatbot Bard delivered an incorrect answer in an online advertisement.

Adding to the downbeat mood in stocks, Federal Reserve officials on Wednesday said more interest rate rises are in the cards as the U.S. central bank moves ahead with efforts to control inflation.

Fed Governor Christopher Waller said inflation seems poised to continue slowing this year but the U.S. central bank’s battle to reach its 2% target “might be a long fight” with monetary policy kept tighter for longer than anticipated.

Stocks rallied on Tuesday following Fed Chair Jerome Powell’s session before the Economic Club of Washington, where he said interest rates might need to move higher than expected if the U.S. economy remained strong, but said he felt a process of “disinflation” is under way.

“After this kind of run and a move to a valuation certainly in the richer camp, you need to have more evidence to keep the market climbing higher,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina.

The Nasdaq remains up about 14% for the year to date.

According to preliminary data, the S&P 500 (.SPX) lost 45.50 points, or 1.11%, to end at 4,117.91 points, while the Nasdaq Composite (.IXIC) lost 201.60 points, or 1.66%, to 11,912.19. The Dow Jones Industrial Average (.DJI) fell 202.51 points, or 0.59%, to 33,954.18.

Investors have been concerned about how aggressive the Fed’s actions may be this year following Friday’s surprisingly strong U.S. jobs report.

They have also been concerned about mixed reports from U.S. companies this earnings season. With results in from more than half of the S&P 500 companies, earnings still are expected to have declined year-over-year in the fourth quarter of 2022, according to IBES data from Refinitiv.

Shares of entertainment company Walt Disney (DIS.N) were little changed ahead of its quarterly results due after the closing bell.

Investors also were digesting comments from President Joe Biden late Tuesday at the State of the Union address, supporting calls to tax corporate share buybacks.

CVS Health Corp (CVS.N) were up after its $9.5 billion cash buyout offer for Oak Street Health Inc (OSH.N). Oak Street Health shares also rose.