The Nasdaq 100 Index closed in correction territory, pushing the broader stock market lower as the Federal Reserve refrained from raising interest rates but a trio of dissents signaled support for tighter monetary policy.
The tech-heavy index fell 1.8% to finish down more than 11% from a June peak. The gauge hovered near correction territory for most of Tuesday but averted closing below the line.
The Philadelphia Semiconductor Index dropped 5.3%, its fifth straight session of declines. The broader S&P 500 Index fell 1.5%.
West Texas Intermediate was up more than 7% to around $85 a barrel after President Donald Trump reiterated that the US would hit Iran hard.
Three of 12 Fed officials voted for a rate increase, a sign that US central bankers are concerned about elevated inflation. Chairman Kevin Warsh said that tightening in the market has done quite a bit of work for policymakers.
ALSO READ: FOMC Highlights: Fed Keeps Rates On Hold; Warsh Says 'Won't Hesitate' If Inflation Persists
"Parsimony, uncertainty, and volatility are the points put forward by Warsh as he attempts to change the Fed's policy regime," RSM Chief Economist Joseph Brusuelas wrote in a note. Sparse statements "will not be well received by the public outside a small section of institutional investors," he said.
Renaissance Macro Research's Neil Dutta said that Warsh "has bought himself only a temporary reprieve." Central bankers will either be saved by the economic data, or they'll hike in September, he said.
After the bell, Microsoft Corp. and Meta Platform Inc.'s earnings results will test investors' diminishing patience for Big Tech's spending on artificial intelligence and the impact that has on cash positions.
In other earnings news, SK Hynix Inc. profit disappointed and it earmarked at least $31 billion in capital spending this year, a record outlay. KLA Corp shares sank after the semiconductor capital equipment company reported results that Morgan Stanley called "uninspiring." Ford Motor Co. rose after raising its profit outlook as consumers keep snapping up high-margin sport-utility vehicles.
Retail investor trading patterns were also in focus. On Tuesday, they "recorded their largest net selling of individual stocks since the Covid crash," according to Vanda Research. Selling was concentrated in memory stocks, and "eight most-sold names exceeded the entire net outflow, which implies that we saw net buying across all the other single stock universe."
ALSO READ: 'Won't Hesitate To Act': Fed Holds Rates, But Warsh Leaves Door Open For Future Hikes
While traders had largely expected the Fed to hold rates steady, some investors had seen the possibility of a surprise hike. Prominent voices, like Citadel Securities, were betting on an increase. On Tuesday, Broker Marex had facilitated a $600,000 block trade on the "yes" contract on Kalshi - betting on an interest-rate increase Wednesday - on behalf of an institutional client.
Sectors in Focus
- Big banks like JPMorgan Chase & Co. and Goldman Sachs Group dropped after recent outperformance, Bloomberg Intelligence analyst Herman Chan said.
- Consumer discretionary, with Herm
- s International SCA shares plunging after sales missed expectations, raising alarms about a faltering Chinese luxury goods market. Earlier this week, LVMH's growth was held back as conflict in the Middle East deterred wealthy shoppers.
- Household and personal care stocks fell as consumer goods heavyweight Procter & Gamble & Co. reported weak first-quarter organic sales and provided an underwhelming annual forecast.
- Truckers and freight brokers extended a losing streak after Knight-Swift's comments about demand and a jury verdict that raised concerns about new litigation risks.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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