By Yasin Ebrahim
Investing.com – The S&P 500 closed above session lows Tuesday, following a stumble in tech as the Federal Reserve got its two-day monetary policy meeting underway.
The S&P 500 fell 0.7%, but had been about 1.4% lower intraday. The Dow Jones Industrial Average slipped 0.30%, or 105 points, the NASDAQ Composite lost 1.1%.
Tech helped the sector move off intraday lows even as worries about higher rates and inflation weighed on high-valued growth corners of the market, which are less attractive in periods of rising rates and inflation because a dollar today is more worth more than a dollar in the future.
Microsoft (NASDAQ:MSFT) led the selloff in big tech, down about 3%, while Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), and Amazon (NASDAQ:AMZN) were also in the red.
The US Producer Price Index surged 0.8% in November following a 0.6% increase in October, above the 0.5% gain expected in a Bloomberg survey. Year-over-year, producer prices jumped 9.6% in November, the largest rise on record.
The Federal Open Market Committee gets its two-day meeting underway, and is expected to announce Wednesday a plan to double its pace of bond purchases tapering to $30 billion per month to provide it with room to hike rates earlier to curb the threat of inflation.
"The pressure is on the Fed to act but after waiting on the sidelines for so long and falling behind the curve, the aggressive action arguably needed to stem the backup in costs will likely come with a significant consequence for growth," Stifel said in a note.
Against the backdrop of elevated inflation and bets on less accommodative policy from the Fed, Treasury yields climbed, paring some of their losses from a day earlier.
Financials bucked the trend lower, underpinned by a rise in Lincoln National (NYSE:LNC), The Travelers (NYSE:TRV), and Prudential Financial (NYSE:PRU) as insurers tend to benefit from a rising environment.
Energy gave up gains, paced by a decline in oil prices fell amid concerns that the impact of the Omicron variant of Covid-19 on travel will dent energy demand.
Tesla (NASDAQ:TSLA) fell 0.8% to close above session lows. Chief Executive Elon Musk sold another $906 million of his shares on Monday, taking his total sales to 11.9 million.
In other news, meme stocks including GameStop Corp (NYSE:GME) and AMC Entertainment (NYSE:AMC) clawed back losses to trade higher.