(Reuters) – U.S. stocks slipped on Thursday, continuing their declines from a day earlier, as a batch of disappointing earnings reports added to the gloom after the Federal Reserve quashed hopes of a toned-down approach to its interest-rate hike trajectory.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 19, 2018. REUTERS/Brendan McDermid
The Fed raised interest rates on Wednesday and projected two hikes next year, instead of three, but what spooked the markets was Fed Chairman Jerome Powell saying the central bank would keep its balance sheet reduction on autopilot.
The specter of rising borrowing costs only added to concerns of slowing corporate profit growth next year as economic growth slackens, with increasing fears of a recession, in the backdrop of the China-U.S. trade war and other geopolitical concerns.
Eight of the 11 major S&P sectors were lower, led by consumer staples falling 1.27 percent and consumer discretionary down 0.52 percent.
Healthcare stocks also took a beating, sliding 0.50 percent, while a drop in crude oil prices pulled down the energy index 0.30 percent.
“All people are talking about today is the aftermath of the Fed hike. The fact that Fed just killed the notion that they are here to backstop the market,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
“People are just trying to fall back on technicals now that fundamentals seem a little chaotic. We’re still dealing with a stock market crash and it’s going to be with us for a while. This isn’t going to end in a quick fashion.”
At 10:02 a.m. ET, the Dow Jones Industrial Average was down 146.17 points, or 0.63 percent, at 23,177.49 and the S&P 500 was down 9.37 points, or 0.37 percent, at 2,497.59.
The Nasdaq Composite was down 1.71 points, or 0.03 percent, at 6,635.11, helped by a jump in some marquee names such as Facebook Inc and Amazon.com Inc.
The Dow Jones Transport Average, considered a barometer of economic activity, was flat after ending Wednesday nearly 21 percent below its record high, in bear territory.
While 298 of the S&P 500 components also ended in bear territory, the index itself is some way off. But the S&P, Dow and Nasdaq are in correction territory, 10 percent or more below recent record highs.
Earnings reports also were not encouraging.
Shares of Walgreens Boots Alliance Inc dropped 1.8 percent as the drugstore chain’s same-store sales missed estimates.
Conagra Brands Inc fell 8.8 percent, the most on the S&P, after the packaged foods maker’s sales missed estimates on delayed shipments and weak demand.
Accenture Plc fell 2.8 percent as its full-year revenue and profit outlook largely fell below estimates.
Declining issues outnumbered advancers for a 1.52-to-1 ratio on the NYSE and a 1.24-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 121 new lows, while the Nasdaq recorded two new highs and 351 new lows.
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Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta