Wall Street weighed down by economy-sensitive cyclical stocks

Dec 17 (Reuters) – Wall Street’s main indexes fell on Friday, weighed down by cyclical stocks linked closely to the economy, as investors digested the Federal Reserve’s decision to end its pandemic-era stimulus faster.

An announcement from the Fed this week signaling three quarter-percentage-point interest rate hikes by the end of 2022 to combat surging inflation had sparked a move into cyclical stocks but those gains proved to be short-lived.

Ten of the 11 major S&P 500 sector indexes fell, with a 2.2% decline in financials (.SPSY) weighing the most on the benchmark index. Only the defensive real estate sector (.SPLRCR) remained afloat.

Other value-oriented sectors including energy (.SPNY), industrials (.SPLRCI) and materials (.SPLRCM) also declined.

Technology stocks (.SPLRCT) dropped 1.0% but pared their declines by early afternoon trading. Apple Inc (AAPL.O), Meta Platforms (FB.O), Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O)last fell between 0.5% and 1.4%.

Traders also pointed to year-end tax selling and the simultaneous expiration of stock options, stock index futures and index options contracts – known as triple witching – as potential causes for volatility.

“People are closing out their positions on a day like this because we have long weekend coming up for Christmas next week, especially institutions as they clear their books, and also a combination of year-end tax selling,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“The overall mood getting into next year is going to be positive, but everything is based on the macroeconomic outlook.”

The Nasdaq index (.IXIC)is now set to end the week 3.2% lower, while the S&P 500 (.SPX) tracked declines of nearly 1.8%.

Heavyweight growth stocks including Apple and Microsoft have outperformed the broader market in 2021, while the Philadelphia SE Semiconductor index (.SOX)gained nearly 35%. The benchmark S&P 500 index gained 23% in the same period.

At 12:06 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 495.72 points, or 1.38%, at 35,401.92, the S&P 500 (.SPX) was down 42.60 points, or 0.91%, at 4,626.07 and the Nasdaq Composite (.IXIC) was down 46.24 points, or 0.30%, at 15,134.20.

Global stocks also retreated on Friday on concerns about the fast-spreading Omicron variant of the coronavirus, which has impacted trading sentiment since late November.

The small-cap Russell 2000 index (.RUT) gained 0.8%, after having fallen more than 10% from a record high hit in early November.

Oracle (ORCL.N) fell 5.8% after a report said the enterprise software maker is in talks to buy electronic medical records company Cerner (CERN.O) in a deal that could be valued at $30 billion. Shares of Cerner surged 12.2%. read more

FedEx Corp (FDX.N) rose 4.5%, boosting the Dow Jones Transport Average Index (.DJT) , after the delivery firm reinstated its original fiscal 2022 forecast on Thursday, even as persistent labor woes chipped away profits. read more

Declining issues outnumbered advancers for a 1.35-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.18-to-1 ratio on the Nasdaq.

The S&P index recorded 20 new 52-week highs and five new lows, while the Nasdaq recorded 11 new highs and 302 new lows.

Source: https://www.reuters.com/markets/europe/nasdaq-futures-lead-declines-big-tech-slides-2021-12-17/