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Wall Street edges lower ahead of Powell comments


U.S. Federal Reserve Chair Jerome Powell addresses reporters after the Fed raised its target interest rate by a quarter of a percentage point, during a news conference at the Federal Reserve Building in Washington, U.S., February 1, 2023. REUTERS/Jonathan Ernst/File Photo

Wall Street’s main indexes slipped on Tuesday as investors awaited Federal Reserve Chair Jerome Powell’s comments, which will be scrutinized for further clues on how long the central bank will keep interest rates higher.

Powell’s comments, due at 12:40 p.m. EST (1740 GMT) before the Economic Club of Washington, will be closely monitored after a strong jobs report last week stymied rising hopes of less aggressive monetary policy.

“Markets are still trying to ascertain last Friday’s employment data on the future direction of the Fed,” Sam Stovall, chief investment strategist at CFRA Research, said.

“He (Powell) is expected to pretty much say what he did, that the market might continue to be underestimating what the Fed is going to be doing, even though he did say that they might be raising rates a couple more times.”

Traders are speculating that the central bank would push the benchmark rate to 5.1% in June, levels that policymakers have backed vociferously.

Capping declines on the tech-heavy Nasdaq (.IXIC) was megacap Microsoft Corp (MSFT.O). The company’s shares added 1.9% ahead of an event later in the day, where it is widely expected to unveil a potential integration of ChatGPT, a chatbot from OpenAI, into its products.

U.S.-listed shares of Baidu Inc soared 8.9% as the Chinese search engine said it would conclude the testing of its ChatGPT-style project ‘Ernie Bot’ in March.

Seven of the top 11 sectors on the S&P 500 were in declines, but technology (.SPLRCT) was among top gainers propped up by Microsoft.

Among top gainers on the Dow Jones Industrial Average (.DJI), Boeing Inc (BA.N) climbed 0.8% after the U.S. planemaker confirmed on Monday that it expects to cut about 2,000 white-collar jobs through attrition and layoffs.

Expectations of high rates for a protracted period dragged Wall Street’s main indexes down on Monday. But, all three major averages are in the black for 2023, with the Nasdaq (.IXIC) adding over 13%, led by a revival in battered mega-cap growth stocks.

So far, more than half of the companies on the S&P 500 have reported quarterly earnings, with 69.1% of them beating expectations, according to Refinitiv. Still, analysts expect fourth-quarter earnings to decline 3.1%.

At 10:18 a.m. ET, the Dow was down 121.48 points, or 0.36%, at 33,769.54, the S&P 500 (.SPX) was down 10.83 points, or 0.26%, at 4,100.25, and the Nasdaq Composite (.IXIC) was down 13.31 points, or 0.11%, at 11,874.14.

DuPont De Nemours Inc (DD.N) jumped 6.2%, on a higher-than-expected quarterly profit supported by higher pricing for its products.

Bed Bath & Beyond (BBBY.O) plunged 40.3% as the embattled home-goods retailer seeks a $1 billion raise in a last-ditch effort to avoid bankruptcy.

Later into the day, U.S. President Joe Biden will deliver the annual State of the Union address to a joint session of Congress.

Declining issues outnumbered advancers for a 2.31-to-1 ratio on the NYSE and for a 1.97-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and two new lows, while the Nasdaq recorded 35 new highs and 15 new lows.