Stocks Hit by Tech Rout With No ‘Fed Put’ in Sight: Markets Wrap

(Bloomberg) — A selloff in Wall Street’s largest technology companies dragged down the stock market, with investors gearing up for Wednesday’s Federal Reserve decision that will likely bring an assessment of how President Donald Trump’s trade policies are impacting the economy.

Equities halted a back-to-back rally, with the cohort of tech megacaps hitting the lowest since September. Tesla Inc. sank 4%. Meta Platforms Inc. became the last of the “Magnificent Seven” to turn lower this year. Nvidia Corp. investors had chief Jensen Huang’s keynote speech in focus. On the eve of the Fed decision, data showing hot import prices weighed on sentiment. Treasuries fluctuated alongside bunds as German lawmakers passed a landmark spending package. Gold rose to a fresh record.

Investors have slashed holdings of US equities by the most on record while cash levels jumped, according to Bank of America Corp.’s latest survey. Just about a month ago, stocks were making new highs on expectations that Trump administration policies would stoke growth. Those assumptions may now be under threat if the economy slows and big bets on artificial intelligence don’t pay off. 

“Because investors’ favorite stocks have suffered so much, it’s likely impacting investor sentiment disproportionately,” said Bret Kenwell at eToro. “Historically, similar levels in sentiment have coincided with at least a short-term bottom in US stocks, although it’s not clear that we’ve seen a capitulatory type move that generally marks the bottom.”

Following a rapid stock-market selloff, talks about a “Fed put” to rescue investors have risen, but anyone expecting some reassurance — at least at the March meeting — will be disappointed, according to Anna Wong at Bloomberg Economics.

“Sticky inflation and higher inflation expectations raise the bar for Fed cuts,” said Lauren Goodwin at New York Life Investments. “The Fed is likely to need to see a stronger deterioration in financial conditions and the economic growth outlook before pre-emptively cutting with inflation figures so strong.” 

Using 2018’s insurance cuts as a guideline, Goodwin said sle’d expect that an equity market valuation decline of 20% or more would be required to push the Fed to act.

The S&P 500 fell 1.1%. The Nasdaq 100 slid 1.6%. The Dow Jones Industrial Average lost 0.8%.

The yield on 10-year Treasuries was little changed at 4.29%. The dollar fluctuated.

With Fed officials expected to hold rates steady on Wednesday, the market will focus on officials’ updated economic projections and Chair Jerome Powell’s press conference for clues about the path ahead. For now, policymakers have signaled they’re in a wait-and-see mode as they seek further progress on inflation and greater clarity on the economic impact of Trump’s policies.

“The ongoing trade tensions and tariff implementations under President Trump’s administration have introduced significant uncertainty,” said Jay Woods at Freedom Capital Markets. “Investors are eager to understand how these policies are influencing the Fed’s economic outlook, especially concerning inflation and growth projections.”

Treasury Secretary Scott Bessent told Fox Business that the underlying economy is healthy and there’s no reason for the US to see a recession, while rejecting the idea of assuring there cannot be a downturn.

As the S&P 500 slid into a correction last week, Bank of America Corp. clients bought US equities — with the sectors they favored indicating they weren’t betting on an economic contraction.

There were “bigger inflows into cyclical than defensive sectors in aggregate, suggesting that clients weren’t positioning for recession,” quantitative strategist Jill Carey Hall wrote in a research note.

Despite all the volatility of this year, the S&P 500’s first “all-or-nothing” day didn’t occur until the end of last week, according to Bespoke Investment Group strategists. Friday and Monday were just the 11th time since 1990 that the S&P 500 had back-to-back daily breadth readings of +400, they said.

Following the 10 prior occurrences, the S&P 500 traded down over the next week 70% of the time — but was higher three months later 80% of the time and higher six and twelve months later 90% of the time.

Even after the 10% correction in US large caps, earnings expectations embedded in stock prices are extremely high — at levels achieved only four times since the tech bubble 25 years ago — and may remain a challenge to equities, according to Gina Martin Adams and Michael Casper at Bloomberg Intelligence.

“Consensus has taken down estimates for the first half but is still holding onto forecasts for a robust second-half recovery that doesn’t appear likely without a major near-term change at the Federal Reserve or with taxes,” they said.

Corporate Highlights:

• Google parent Alphabet Inc. agreed to acquire cybersecurity firm Wiz Inc. for $32 billion in cash, reaching a deal less than a year after initial negotiations fell part because the cloud-computing startup wanted to stay independent.
• Apple Inc. lost its fight at Germany’s top civil court to overturn a regulator’s decision to put it under tighter antitrust scrutiny alongside other US tech giants.
• Sarepta Therapeutics Inc. shares slumped Tuesday after the company said a young man treated with its gene therapy died of acute liver failure.
• Grab Holdings Ltd. is moving forward with its attempt to take over GoTo Group, according to people familiar with the matter, who said the Singaporean ride and delivery firm has begun due diligence on its Indonesian rival.

Key events this week:

• Bank of Japan rate decision, Wednesday
• Federal Reserve rate decision, Wednesday
• China loan prime rates, Thursday
• Bank of England rate decision, Thursday
• US Philadelphia Fed factory index, jobless claims, existing home sales, Thursday
• Eurozone consumer confidence, Friday
• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.1% as of 12:38 p.m. New York time
• The Nasdaq 100 fell 1.6%
• The Dow Jones Industrial Average fell 0.8%
• The Stoxx Europe 600 rose 0.5%
• The MSCI World Index fell 0.7%
• Bloomberg Magnificent 7 Total Return Index fell 2.3%
• The Russell 2000 Index fell 1%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0932
• The British pound was little changed at $1.2989
• The Japanese yen fell 0.2% to 149.54 per dollar

Cryptocurrencies

• Bitcoin fell 2.5% to $81,874.23
• Ether fell 2.6% to $1,884.69

Bonds

• The yield on 10-year Treasuries was little changed at 4.29%
• Germany’s 10-year yield was little changed at 2.82%
• Britain’s 10-year yield advanced one basis point to 4.65%

Commodities

• West Texas Intermediate crude fell 0.6% to $67.18 a barrel
• Spot gold rose 1.1% to $3,034.46 an ounce

–With assistance from Sujata Rao, Allegra Catelli, John Viljoen and Aya Wagatsuma.

©2025 Bloomberg L.P.