Nasdaq 100: Apple, Nvidia Drag Tech Stocks as Fed Decision Looms

Apple, Nvidia Losses Weigh on Markets as Fed Decision Approaches

The S&P 500 and Nasdaq remained flat in mid-session trading Wednesday as losses in Apple and Nvidia offset broader market gains. Investors stayed cautious ahead of the Federal Reserve’s interest rate announcement, expected at 19:00 GMT. While the central bank is widely expected to keep rates steady, traders are focused on potential signals from Chair Jerome Powell regarding future policy moves.

How Did Tech Stocks Perform?

Technology stocks led market losses, with the sector sliding 1.1%. Nvidia dropped 3.3% after rallying nearly 9% the previous session, continuing a volatile week for the chipmaker. The decline followed news of a Chinese startup developing AI models that could run on less advanced chips, raising competitive concerns.

Apple fell 1.1% after Oppenheimer downgraded the stock to “perform” from “outperform,” citing concerns ahead of the company’s earnings release later this week.

Despite weakness in mega-cap tech, semiconductor equipment stocks gained after ASML reported stronger-than-expected quarterly bookings. KLA Corp rose 1.5%, Applied Materials gained 1.3%, and Lam Research added 0.5%.

What Are Investors Watching from the Fed?

Markets have priced in nearly 100% odds that the Fed will keep its benchmark rate steady at 4.25%-4.50%, according to CME Group data. However, traders will closely analyze Powell’s comments for insights on inflation, rate cuts, and economic risks.

Investor uncertainty is also fueled by potential tariff policies from President Donald Trump, which could add inflationary pressure and complicate future rate decisions. The December personal consumption expenditures (PCE) index— a key inflation gauge— is set for release Friday and could provide further clarity.

Which Sectors Outperformed?

Financial stocks outperformed, with the SPDR S&P Financial Sector Fund (XLF) hitting an all-time high, gaining 0.6%. Wolfe Research noted that while financials may appear overbought, the sector is well-positioned for continued strength. Prudential Financial was highlighted as a stock to watch ahead of its earnings report next week.

The communications services sector also posted gains, with the SPDR S&P Communications Services Fund (XLC) rising 0.5% for its eighth consecutive winning session. T-Mobile jumped 8%, hitting its highest level since May 2021, while Fox climbed 1.4% to a new all-time high. Warner Bros. Discovery, AT&T, and Netflix also posted gains.

What’s Next for the Market?

With just hours until the Fed’s decision, market activity may remain subdued as traders wait for Powell’s commentary. Earnings from major tech firms, including Microsoft, Meta Platforms, and Tesla, are also set for release after the closing bell, adding another potential catalyst for volatility.

As the Fed announcement nears and inflation data looms on Friday, investors will be watching closely for any shifts in policy expectations that could drive the next market move.

More Information in our Economic Calendar.