S&P 500 flounders on tech wreck as economic concerns weigh

By Yasin Ebrahim

Investing.com -- The S&P 500 fell Wednesday, pressured by tech as data pointing to cooling in the labor market and weakness in services activity stoked concerns about the economy just as Federal Reserve officials talk up the prospect of further rate hikes.

The S&P 500 fell 0.3%, the Dow Jones Industrial Average gained 0.2%, or 72 points, and the Nasdaq fell 1.2%.

A stumble in Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), and Meta Platforms Inc (NASDAQ: META) led the broader market lower as risk sentiment was soured by monthly private payrolls in March and U.S. services data fell short of estimates, triggering fresh recession fears.

Private payrolls grew by 145,000 in March, a sharp decline from the 261,000 in February, according to a report released Wednesday by ADP and Moody's Analytics. That was well short of economists’ forecast of 200,000.

The services ISM fell to 51.2 in March from 55.1 in February, missing the consensus of 54.5.

“Much of the pressure that fuels inflation is rooted in sticky-high unit labor costs in the service sector,” Jefferies said. But the prices paid index suggests that “this pressure remains very firm, and will keep the Fed on track for another rate hike in May,” it added.

Cleveland Fed President Loretta Mester on Wednesday backed a higher for longer rate regime, saying that interest rates will likely increase.

A stumble in the chip sector also weighed on the broader sector as NVIDIA Corporation (NASDAQ: NVDA) fell more than 2% on worries about increased competition after Alphabet's (NASDAQ: Google) revealed details about its artificial intelligence chips, claiming they were faster and less power hungry than that of rivals.

Palantir Technologies (NYSE: PLTR), meanwhile, came under pressure after announcing that it had expanded its cloud computing pact with Microsoft (NASDAQ: MSFT) to the public sector from the private sector.

In a sign of investor jitters, defensive corners of the market including utilities and consumer staples were in the ascendency, with the latter boosted by a rise in Conagra Brands.

ConAgra Foods (NYSE: CAG) rose more than 2% after reporting quarterly results that beat Wall Street estimates on both top and bottom lines as the frozen-food maker’s price hikes helped offset weaker demand.

In other news, FedEx Corporation (NYSE: FDX) detailed plans to combine its ground, air and other delivery networks into a single business by June 2024 to accelerate cost-cutting efforts.

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