S&P 500 Slips as Pre-Fed Jitters Keep Investors on Edge By Investing.com

By Yasin Ebrahim

Investing.com – The S&P 500 slipped from near all-time highs Monday on worries that the Federal Reserve’s two-day meeting could usher in a talk of bond tapering in the wake of a sharp upturn in inflation.

The S&P 500 fell 0.28%, though remained close to its record high 4,249.97. The Dow Jones Industrial Average was down 0.70%, or 243 points, and the Nasdaq Composite was up 0.37%.

Investors could be in for a surprise on Wednesday when the Federal Open Market Committee, or FOMC, concludes its two-day meeting as investor bets that inflation is transitory may prove somewhat unfounded.

“Given the shift in the mix of inflation from transitory towards sustainable, the risk of a hawkish tilt within the FOMC has increased,” Morgan Stanley (NYSE:MS) said in a note.

The fall in rates leading up to the FOMC meeting suggests investors are dismissing inflation as transitory, just “at the time when the sustainability of inflation looks more viable,” Morgan Stanley added.  

Legendary investor Paul Tudor Jones said Monday that if the Fed doesn’t acknowledge the recent jump in the pace of inflation, then that would be the “green light to go heavy on the inflation trade.” Tudor touted gold, bitcoin and cash as his go-to inflation hedges.

Against the backdrop of these concerns somewhat that the Fed may tilt hawkish, Treasury yields climbed, but that didn’t spell doom and gloom for highly-valued technology stocks, which tend to be less attractive in rising rate environments.  

Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), while Apple (NASDAQ:AAPL),  Amazon.com (NASDAQ:AMZN) and Facebook (NASDAQ:FB) traded higher.

Emerging growth stocks – that had came under pressure earlier this year over valuation concerns – including Peloton (NASDAQ:PTON), Zoom and Docusign were mixed, with the latter up more than 2%.

Cyclicals including industrials, energy, and financials were not having a good day.

Financials slipped more than 1%, paced by a drop in banking stocks after JPMorgan’s chief executive Jamie Dimon warned the that pandemic-led boom in trading revenue for JPMorgan could be nearing an end.

Fixed-income trading revenue JPMorgan will be just above $6 billion in the second quarter, Dimon said Monday at a Morgan Stanley virtual conference.

JPMorgan Chase & Co (NYSE:JPM), Citigroup (NYSE:C) and Goldman Sachs Group (NYSE:GS) were down more than 1%.

Energy, meanwhile, failed to capitalize on a jump in oil prices toward 32-month highs amid losses in Baker Hughes (NYSE:BKR), Schlumberger (NYSE:SLB) and Hess (NYSE:HES).

In other news, Lordstown Motors (NASDAQ:RIDE) fell 17% after Steve Burns and Julio Rodriguez resigned as the company’s chief executive officer and chief financial officer, respectively.