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US stocks tech sell-off continues as Fed meeting starts

stock markets

The three US benchmark indices extended losses for the second day, while the FOMC meeting is underway, as more economic data shows signs of ongoing burning inflation.

The US producer price index (PPI) increased by 0.8% month-on-month in November, and 9.6% year-on-year, much higher than the forecasts at 0.5% and 9.2% respectively. It is also the highest level on record. The data indicates that US inflation increase is speeding up, which strengthens the expectation for the Fed to accelerate tapering bond purchases. 

The Dow Jones Industrial Average fell 0.3%, the S&P 500 slid 0.75%, and Nasdaq declined 1.14%. The technology sector fell sharply as investors took profit on the growth stocks amid concerns of overvaluation in a tightening monetary policy cycle, as the tech sector usually has a relatively higher level of long-term debts. 

Microsoft lost 3.4%, leading the big tech sell-off. All of the other tech giants including Alphabet, Apple, Amazon, and Meta Platform all finished lower. Tesla closed 0.8% lower after the EV maker's share price slumped 3% at the intraday low. CEO Elon Musk sold another $9.6 million of his stake on Monday, taking the whole amount to 11.9 million. Meanwhile, the financial sector outperformed as bank stocks are seen to benefit in a rising interest-rate cycle. JP Morgan Chase's shares were up 0.83%, Wells Fargo rose 0.69%, and Citigroup gained 0.78%.

Elsewhere in the crypto markets, dogecoin surged more than 20% after Elon Musk said Tesla would accept it as payment for some of its merchandise. All of the other major coins all rebounded from the intraday low. Bitcoin and ether were up by 3.22% and 2.28% respectively. The cryptocurrencies have been sharply sold off since the beginning of November. 

The USD strengthened further, while the 10-year US treasury yield was at 1.439%. Gold futures fell $17.1, to $1,771.2 per ounce. The WTI futures price slid 1.28%, to $70.38.

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