Nasdaq slides over 1% as growth stocks fall after hawkish Fed drives up yields
Corrects to remove dated graphic
US weekly jobless claims unexpectedly fall
FedEx gains on surprise profit beat
Broadcom down on report Google to replace co as AI chip supplier
Indexes down: Dow 0.47%, S&P 0.86%, Nasdaq 1.22%
By Ankika Biswas and Shristi Achar A
Sept 21 (Reuters) -Nasdaq led declines in key Wall Street indexes on Thursday as a jump in Treasury yields knocked down growth stocks after the Federal Reserve signaled that another rate hike was in the offing this year.
Rate-sensitive stocks including Tesla TSLA.O, Meta Platforms META.O, Amazon.com AMZN.O, Alphabet GOOGL.O, and Nvidia NVDA.O fell between 1.5% and 3.0% as the two-year and 10-year Treasury yields US2YT=RR, US10YT=RR scaled multi-year highs. US/
Semiconductor firm Broadcom AVGO.O slid 3.9% on report Alphabet-owned Google's executives discussed dropping the company as a supplier of artificial intelligence chips as early as 2027.
The report also said Google had been working to replace Broadcom AVGO.O as the supplier for networking chips used in its data centers with Marvell Technology MRVL.O which rose 0.9%.
The Philadelphia chip index .SOX lost 1.1%.
The U.S. central bank delivered a widely anticipated pause on Wednesday and revised economic projections higher with warnings that the battle against inflation was far from over, prompting a weak session for Wall Street.
The benchmark interest rate could be hiked one more time in 2023 to a peak range of 5.50%-5.75%, while monetary policy could stay tighter than was expected through 2024, the Fed's updated quarterly projections showed.
"Our economists were expecting cuts in each of the four quarters of next year, but now they think the first cut will be delayed until sometime in the second quarter," said Sam Stovall, chief investment strategist at CFRA Research in New York
Adding to rate jitters, U.S. jobless claims unexpectedly fell last week, while the Philadelphia Fed's business conditions index reading showed a worse-than-expected drop in September, fueling recession concerns.
"With interest rates like that and with other measures of the economy showing weaker-than-expected readings, the increasing concern is that we are headed for a recession," Stovall added.
The CBOE volatility index .VIX, known as Wall Street's "fear gauge", hit its highest level in nearly one month, reflecting rising investor anxiety.
Traders' bets on the benchmark rate remaining unchanged in November and December stood at 72% and 53%, respectively, according to CME's FedWatch tool.
Meanwhile, weak performance of recent listings after their debut highs has dampened hopes of a likely revival in the initial public offering market amid high interest rates and broader market declines.
Marketing automation firm Klaviyo's KVYO.N shares fell 1.3%, after closing well below their intra-day debut high on Wednesday at $32.76.
Instacart CART.O fell 5.1% briefly slipping below its IPO price of $30 per share, while Arm Holdings ARM.O shed 3.4% to $51.1, nearing its IPO price of $51 per share.
At 9:50 a.m. ET, the Dow Jones Industrial Average .DJI was down 161.34 points, or 0.47%, at 34,279.54, the S&P 500 .SPX was down 37.92 points, or 0.86%, at 4,364.28, and the Nasdaq Composite .IXIC was down 163.88 points, or 1.22%, at 13,305.25.
FedEx FDX.N added 5.8% after surprising investors with a big quarterly profit beat.
Fox Corp FOXA.O and News Corp NWSA.O added 1.7% and 0.4%, respectively, after Rupert Murdoch stepped down as the chairman of both firms.
Declining issues outnumbered advancers by a 7.06-to-1 ratio on the NYSE and by a 3.86-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 16 new lows, while the Nasdaq recorded seven new highs and 207 new lows.
Reporting by Ankika Biswas and Shristi Achar A in Bengaluru; Editing by Arun Koyyur and Vinay Dwivedi
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