The S&P 500 is falling forward of an replace from the Fed, led by tech shares

US stocks fell Wednesday as investors await the outcome of the Federal Reserve’s two-day political meeting and Fed Chairman Jerome Powell’s comments later that day.

The S&P 500 was down 0.5%. The Nasdaq Composite lost 1.2% as technology stocks were hit again by rising bond yields. Apple, Alphabet, Facebook and Netflix are all in the red. Tesla lost more than 2%. The Dow Jones Industrial Average gained 80 points, supported by Caterpillar and McDonald’s.

The 10-year government bond yield rose 6 basis points to 1.689%, reaching a level not seen since the end of January 2020. It exceeded its recent high of 1.642% on Friday. The 30-year rate rose to 2.428%, the highest level since November 2019. Higher rates affect the value of future cash flows and are particularly harmful to growth-oriented companies.

On Wednesday, the Fed will release new economic and interest rate forecasts that could suggest that Fed officials expect a rate hike by or even before 2023. The central bank is expected to recognize stronger growth, which should bring the Fed’s loose policies under control, especially given the new $ 1.9 trillion stimulus spending.

“It’s no exaggeration to say that this FOMC meeting has the potential to be the most important in years as the market effectively calls for action by the Fed to counter the recent surge in bond yields,” said Tom Essaye, founder of Sevens Report . said in a note.

Investors will also hear from Fed Chairman Powell, who is likely to move the equity and bond markets with his comment, although he is unlikely to offer details. Many expect the Fed chairman to stress the central bank’s willingness to let inflation run hotter than usual in order to ensure a full recovery in the labor market.

“There is this assumption [Powell’s] will be reluctant … In another round of spending, he will find it difficult not to be reluctant. You are definitely afraid of scaring the market. They are afraid of disrupting their recovery, “said Peter Boockvar, chief investment officer, Bleakley Advisory Group.

Rising interest rates have been an overhang for stocks in the past few weeks, especially for the tech sector. The surge in yields has forced value stocks to shift away from growth, pushing the Dow Jones Industrial Average and S&P 500 near record highs.

Disney shares eliminated previous losses and gained 0.8% after CEO Bob Chapek told CNBC that California’s two Disneyland theme parks will reopen on April 30th.

McDonald’s was up 2% after Deutsche Bank upgraded the stock to buy from the hold.

– CNBC’s Patti Domm contributed to this report.

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