Tech Stocks Lead Pullback On Wall Street As Fed Decision Looms

(RTTNews) - After turning in a mixed performance early in the session, the major U.S. stock indexes all moved to the downside over the course of the trading day on Friday. The tech-heavy Nasdaq led the way lower and was eventually joined in negative territory by the Dow.

The major averages all closed in the red, although the Nasdaq underperformed its counterparts by a wide margin. While the Nasdaq tumbled by 225.50 points or 1.9 percent to 11,834.11, the S&P 500 slumped 37.32 points or 0.9 percent to 3,961.63 and the Dow fell by 137.61 points or 0.4 percent at 31,899.29.

With the pullback on the day, the major averages gave back ground after ending Thursday's trading at their best closing levels in over a month but still posted strong gains for the week.

For the week, the Nasdaq spiked by 3.3 percent, the S&P 500 surged by 2.5 percent and the Dow jumped by 2.0 percent.

A steep drop by shares of Snap Inc. (SNAP) weighed on the tech-heavy Nasdaq, with the Snapchat parent plunging by 39.1 percent to a two-year closing low.

The nosedive by Snap came after the company reported disappointing second quarter results and declined to provide guidance due amid "incredibly challenging" conditions. Snap also announced plans to "substantially slow" its rate of hiring.

Social media giant Twitter (TWTR) also reported second quarter results that missed analyst estimates, citing advertising industry headwinds and uncertainty related to the pending acquisition by Elon Musk.

Computer hardware stocks also showed a substantial move to the downside on the day, dragging the NYSE Arca Computer Hardware Index down by 3.1 percent. The index ended Thursday's trading at its best closing level in over a month.

Seagate Technology (STX) helped lead the sector lower after the disk drive maker reported weaker than expected fiscal fourth quarter results and provided disappointing guidance.

Significant weakness was also visible among semiconductor stocks, as reflected by the 2.6 percent slump by the Philadelphia Semiconductor Index. The index also pulled back off a one-month closing high.

Outside of the tech sector, airline stocks extended the sell-off seen during trading on Thursday, resulting in a 2.8 percent nosedive by the NYSE Arca Airline Index.

Steel, banking, and oil stocks also saw notable weakness on the day, while interest rate-sensitive utilities stocks bucked the downtrend.

The pullback on Wall Street also came as traders looked ahead to next week's highly anticipated monetary policy decision by the Federal Reserve.

The Fed is widely expected to raise interest rates by at least 75 basis points as part of its ongoing efforts to combat elevated inflation.

"Corporate America showed a major pivot this earnings season and that is to spend less on and to ease up on hiring," said Edward Moya, Senior Market Analyst at OANDA.

He added, "With Wall Street remaining so pessimistic that we will retest the summer lows, it will be hard to see stocks muster up a meaningful rally until investors become confident they can see the end of the Fed's tightening cycle."

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.4 percent, while China's Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved modestly higher on the day. While the French CAC 40 Index crept up by 0.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index both inched up by 0.1 percent.

In the bond market, treasuries extended the notable upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 12.7 basis points to a nearly two-month closing low of 2.783 percent.

Looking Ahead

The Fed decision is likely to be in the spotlight next week, although traders are also likely to keep an eye on earnings news from a slew of big-name companies.

Coca-Cola (KO), McDonald's (MCD), Alphabet (GOOGL), Microsoft (MSFT), Boeing (BA), Pfizer (PFE), Amazon (AMZN), and Intel (INTC) among just a few of the companies due to report their quarterly results next week.

Trading could also be impacted by reaction to reports on consumer confidence, new home sales, durable goods orders, second quarter GDP and personal income and spending.