NASDAQ Bloodied Wednesday on Fed Word

Stocks fell sharply Wednesday, with the Dow Jones Industrial Average suffering its first decline of 2022, as Wall Street geared up for potentially tighter U.S. monetary policy.

The blue-chip index went into a tailspin and descended 392.54 points, or 1.1%, from Tuesday’s all-time record, concluding the day at 36,407.

The S&P 500 index dipped 92.96 points, or 1.9%, to 4,700.58.

The NASDAQ tumbled 522.54 points, or 3.3%, at 15,100.17. The tech-heavy index saw its biggest one-day loss since February.

Rates also jumped, putting pressure on equities, after the minutes from the Federal Reserve’s most recent meeting showed the central bank has discussed reducing its balance sheet shortly after it raises rates later this year.

The Fed is tapering its bond purchases now and has already indicated to the market that it will raise rates soon after it finishes that taper in March. But the market is awaiting indications from the Fed on what it will do with its nearly $9-trillion balance sheet once it’s done increasing it.

The minutes show officials to be considering shrinking the balance sheet along with raising rates as another way to remove policy accommodation.

Megacap tech stocks fell, with Netflix and Alphabet each dropping at least 4%. Meta Platforms and Microsoft both lost more than 3%, and Apple slid 2.7%.

Salesforce dropped 8.2% following a downgrade from UBS. The firm also cut Adobe, sending its shares down 7.1%. Among chipmakers, Advanced Micro Devices and Nvidia both fell about 5%.

Honeywell and Caterpillar posted small gains amid the broader market sell-off. Fellow Dow member Pfizer gained 2% after analysts at Bank of America upgraded the stock.

ADP reported Wednesday that private job growth totaled 807,000 in December, more than double the Dow Jones estimate of 375,000. The data in the report covers only through the middle of December, however, which was before the height of the escalation in COVID cases and concerns.

Investors looking for clues on where the economy stands heading into the New Year also awaited Friday’s more closely watched non-farm payrolls count, which is expected to show a gain of 422,000.

Prices for 10-year Treasurys eased back, raising yields to 1.70% from Tuesday’s 1.65%. Treasury prices and yields move in opposite directions.

Oil prices poked ahead 12 cents to $77.11 U.S. a barrel.

Gold prices fell $4.80 to $1,809.80 U.S. an ounce.