Stock Market Today: Dow Ekes Out Win, but Fed Hike Fears Stifle Gains

By Yasin Ebrahim

Investing.com -- The Dow eked out a win Tuesday, as investors had to contend with wild moves in stocks amid hawkish Federal Reserve commentary pointing to the need to tighten monetary policy further and keep rates higher for longer weighed on stocks.   

The Dow Jones Industrial Average climbed 0.1%, or 36 points, and the Nasdaq was down 1.1%, and the S&P 500 fell 0.63%.

Federal Reserve Bank of Cleveland President Loretta Mester echoed recent remarks from other voting Fed members, calling on the need for monetary policy to become “more restrictive” to “put inflation on a sustainable downward path to 2%.”

The remarks come just days ahead of Thursday's inflation report that is expected to all but confirm that the Fed is set hike interest rates by 75 basis points for the fourth time in a row next month. 

In anticipation of another large rate hike, Treasury yields climbed, with the 10-year Treasury rising to 4%. 

Tech continued to stutter, with Meta Platforms Inc (NASDAQ:META) and Microsoft (NASDAQ:MSFT) falling to 52-week lows

Atlantic Equities downgraded Meta to underweight from neutral, citing the impact of a challenging macroeconomic environment on the social media giant.

Semiconductor stocks added to their losses from a day earlier as sentiment remained bearish on the sector in the wake of the U.S. export ban on the sale of chips and other semiconductor equipment to China.

Tech has come under the bulk of pressure in the recent market selloffs and attracted dip-buying activity, but experts believe it is too early to rotate back into growth stocks on expectations that the trend of rising Treasury yields, the enemy of growth stocks, is likely to continue.

“When rates come down, then value underperforms growth…that is what really drove that June through August rally in growth,” David Keller at StockCharts.com told Investing.com's Yasin Ebrahim in an interview on Tuesday. But “those trends have now all reversed,” according to Keller.

“Starting in early August, rates bottomed out and then rotated higher, hitting 4% on the 10-year Treasury yield...and in the last two months, value stocks have once again emerged,” he added.

Consumer staples, a defensive corner of the market, was led higher by a 2% rally in Walgreens Boots Alliance Inc (NASDAQ:WBA) after the drugstore chain said it had acquired healthcare firm CareCentrix. The announcement comes ahead of the company’s quarterly results due Thursday.