Equities Tank as Fed Clouds Gather Ahead of Data – US Market Wrap

Heavy selling returned on Wall Street, ending a weeklong breather that followed the US government’s reopening, as hawkish comments from Fed officials ahead of a wave of economic data prompted traders to unload risk assets from tech stocks to crypto.

With optimism over the shutdown’s resolution already factored in, worries about stretched valuations resurfaced, triggering a pullback in high-flying tech leaders. Some market watchers also pointed to a rotation into more defensive names. It was the third time in two weeks that the S&P 500 dropped more than 1%, after doing so only once in the previous three months. Bitcoin fell below $100,000 and is now down more than 20% since early October.

Trump signed legislation to end the longest shutdown in US history, though it may take time for federal agencies to fully resume operations. The October jobs report will omit the unemployment rate, US chief economic adviser Hassett told Fox News’ America’s Newsroom.

Traders are currently pricing in roughly even odds that the Fed will cut rates in December. Fed’s Powell said last month that another reduction is “not a foregone conclusion,” noting the decision will hinge on incoming data. Some investors worry that missing economic figures due to the shutdown could strengthen arguments for policymakers to hold steady.

In separate remarks, Fed’s Musalem said officials should proceed carefully with inflation still above target, while Fed’s Hammack said policy should remain “somewhat restrictive.” Fed’s Kashkari said he didn’t support the last cut and is undecided on December.

The S&P 500 fell 1.7%. The Nasdaq 100 dropped 2.1%. A gauge of megacaps slid about 2.7%. The Russell 2000 declined 2.8%.

The 10-year Treasury yield rose five basis points to 4.12%. The dollar dipped. Gold fell.