Wall Street falls with tech shares; investors assess rate outlook

NEW YORK, Oct 10 (Reuters) – US stocks declined on Monday as investors worried about the impact of more interest rate hikes and pulled out of technology shares and chipmakers after the United States announced restrictions aimed at hobbling China’s semiconductor industry.

Federal Reserve Vice Chair Lael Brainard said tighter US monetary policy has begun to be felt in an economy that may be slowing faster than expected, but the full brunt of Fed interest rate increases still won’t be apparent for months. read more

Despite growing concerns by a number of economists and analysts that the Fed’s interest rate hikes could increase unemployment, Chicago Fed President Charles Evans continued to back the central bank’s attempt to lower inflation, saying that while it sounds “optimistic” he believed it could do so “while also avoiding recession.” read more

“People are worried about the economy. People are worried about a possible recession,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

The Philadelphia SE Semiconductor index (.SOX) was lower and touched a two-year low, after the Biden administration published a set of export controls on Friday, including a measure to cut China off from certain semiconductor chips made anywhere in the world with US equipment. read more

Shares of Nvidia Corp (NVDA.O), Qualcomm Inc (QCOM.O), Micron Technology Inc (MU.O) and Advanced Micro Devices (AMD.O) were lower.

Investors were also cautious ahead of the US third-quarter earnings season, which is set to kick off on Friday with results from some of the major banks.

According to preliminary data, the S&P 500 (.SPX) lost 26.80 points, or 0.74%, to end at 3,612.86 points, while the Nasdaq Composite (.IXIC) lost 112.62 points, or 1.06%, to 10,539.78. The Dow Jones Industrial Average (.DJI) fell 90.46 points, or 0.31%, to 29,208.82.

Estimates for third-quarter earnings have come down in recent weeks. Analysts expect earnings for S&P 500 companies to have risen 4.1% compared with an increase of 11.1% expected at the beginning of July, according to IBES data from Refinitiv.

Microsoft (MSFT.O) was among the biggest drags on the three major indexes.

Investors were also awaiting US inflation data this week.

The US bond market was closed for the Columbus Day holiday on Monday.

Additional reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Additional reporting by Bansari Mayur Kamdar; Editing by Anil D’Silva and Aurora Ellis

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