Stocks extend 2022 losses as investors brace for rate hikes

Stocks closed broadly lower on Wall Street Wednesday and deepened the losses for major indexes this year following another choppy day of trading.

Stocks bounced between gains and losses throughout the day, largely following the direction of technology stocks, which sold off in the afternoon. The sector has triggered much of the choppiness in the market as investors shift money in expectation of rising interest rates. Higher rates make shares in high-flying tech companies and other expensive growth stocks relatively less attractive.

“We’ve seen some givebacks from the returns we got last year,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “What we’re seeing is that the market is resetting now.”

The tech-heavy Nasdaq fell 166.64, or 1.1%, to 14,340.26 and is now 10.7% below the all-time high it set on Nov. 19. That decline puts the index in what the market considers a “correction.”

The S&P 500 fell 44.35 points, or 1%, to 4,532.76, with 77% of stocks in the benchmark index losing ground. The only sectors that closed with gains were utilities and household goods makers, signaling a shift to less risky investments by traders. The Dow Jones Industrial Average fell 339.82, or 1%, to 35,028.65.

Stocks have slid this month as investors try to gauge how aggressively the Federal Reserve will act to combat inflation. The Fed is already pulling back on bond purchases aimed at holding down long-term interest rates. As of late Tuesday, investors were pricing in a better than 86% probability that the Fed will raise short-term rates at its meeting of policymakers in March. A month ago, they saw less than a 47% chance of that, according to CME Group.