*
FedEx Falls Amid Gloomy Annual Revenue Forecast
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General Mills declines after lowering its annual sales forecast
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Alphabet up as report says Google to restructure ad sales unit
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Indices down: Dow 1.27%, S&P 1.47%, Nasdaq 1.50%
(Updated with closing prices)
By Stephen Culp
NEW YORK, Dec 20 (Reuters) – U.S. stocks closed lower on Wednesday after a sharp mid-afternoon fall that ended Wall Street’s impressive rally fueled by falling interest rates and the Federal Reserve’s dovish turn.
The three major U.S. stock indexes began falling around 2:30 p.m. EST and ended the session between 1.3% and 1.5% below Tuesday’s close.
Stocks hit “almost all-time highs, they hit resistance,” said Jay Hatfield, portfolio manager at InfraCap in New York, noting that the downturn was “surprisingly noisy, things went from hot to very cold quickly”.
“It’s surprising how aggressive the selling is, but it makes sense given how far we’ve come,” Hatfield added.
Some traders said the selloff could have been compounded by significant purchases of short-term puts on the S&P 500, including put contracts that would protect against a fall below the 4,755 level. clue by the end of the session.
Put options give the right to sell shares at a fixed price in the future, and sometimes hedging activity related to options can increase volatility.
During the session, the S&P 500 moved within 0.5% of its all-time closing high. Hitting a new closing high would have confirmed that the benchmark index has been in a bull market since closing at the bear market floor in October 2022.
The index is now more than 2.0% below its closing record.
“We had this aggressive rally in December and investor sentiment is high, it went from bearish to bullish in almost record time,” said Thomas Martin, senior portfolio manager at GLOBALT in Atlanta. “So the markets are asking ‘what now?'”
At the end of its policy meeting last Wednesday, the Federal Open Market Committee signaled that it had reached the end of its tightening cycle and opened the door to rate cuts in the coming year .
Chicago Fed President Austan Goolsbee reiterated Tuesday evening that the pace at which inflation slows to meet the Fed’s 2% annual target will determine rate cut policy.
At last glance, financial markets were pricing in a 71.1% probability that this first reduction would occur as early as March, according to CME’s FedWatch tool.
On the economic front, a larger-than-expected jump in U.S. consumer confidence and a surprise increase in existing home sales helped push major indexes green.
The Commerce Department is expected to wrap up the week with its third and final third-quarter GDP report on Thursday, which will be followed on Friday by its broad Personal Consumption Expenditures (PCE) report, which will cover income growth, spending consumption. and, above all, inflation.
The Dow Jones Industrial Average fell 475.92 points, or 1.27%, to 37,082, the S&P 500 lost 70.02 points, or 1.47%, to 4,698.35 and the Nasdaq Composite fell. by 225.28 points, or 1.5%, to 14,777.94.
All 11 major sectors of the S&P 500 closed in the red, with consumer staples suffering the biggest percentage decline after packaged food company General Mills lowered its sales forecast.
FedEx slipped
12.1
% after package delivery
lack
its quarterly profit estimates and cut its full-year revenue forecast.
FedEx rival United Parcel Service down
2.9
%.
Alphabet won
1.2
% after the company
announcement
he was restructuring Google’s ad sales unit.
Management consulting firm Aon
tumbled
6.0
% after announcing plans to acquire private insurance broker NFP in a $13.4 billion deal.
Declining issues outnumbered advancing ones on the NYSE by a ratio of 2.64 to 1; on the Nasdaq, a ratio of 2.26 to 1 favored the declines.
The S&P 500 posted 36 new 52-week highs and 1 new low; The Nasdaq Composite recorded 210 new highs and 89 new lows.
Volume on U.S. exchanges totaled 12.84 billion shares, compared to an average of 12.15 billion for the entire session over the past 20 trading days.
(Reporting by Stephen Culp; additional reporting by Saqib Ahmed in New York, Johann M Cherian and Shristi Achar A in Bangalore; editing by David Gregorio)
