Wall St falls as Fed decision looms; AMD boosts chipmakers

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Fed's rate decision expected at 1400 ET

AMD expects strong second half of 2023

Amgen weighs on Dow as Q4 revenue falls slightly

EA cuts bookings view, shares slide

Indexes down: Dow 1.12%, S&P 0.63%, Nasdaq 0.44%

Adds comments, details; updates prices

By Johann M Cherian and Shreyashi Sanyal

Feb 1 (Reuters) -U.S. stock indexes fell on Wednesday ahead of the Federal Reserve's decision on interest rates later in the day, while an upbeat outlook from Advanced Micro Devices lifted chipmakers.

The Fed is widely seen as raising its target interest rate by a quarter of a percentage point in its first policy meeting of the year, after rapid increases in 2022 to tame decades-high inflation.

Money markets are betting on one more 25 basis point (bps) hike in March, and a terminal rate of 4.9% in June. 0#FEDWATCH

"It's really boiling down to a longer term outlook beyond this policy meeting and where this peak terminal rate with Fed funds is going to be," Adam Turnquist, chief technical strategist at LPL Financial.

Recent readings have indicated that inflation is easing, with the Fed also looking at data that will determine the resilience of the labor market and the pace of wage growth.

Meanwhile, data showed U.S. job openings unexpectedly rose in December ahead of the Labor Department's comprehensive report on nonfarm payrolls for January due on Friday.

Separately, data showed U.S. manufacturing contracted further in January as higher interest rates stifled demand for goods.

"It's going to come down to the narrow line between avoiding a recession and entering a recession. That's the Fed's issue as they finish up their two-day policy meeting today," Turnquist added.

All three indexes had a strong start to the year, with the S&P .SPX and the Dow .DJI witnessing their first gain for January since 2019 as investors returned to markets, which were bruised in the previous year by a hawkish Fed.

Advanced Micro Devices Inc AMD.O added 8.0% as the semiconductor maker said it expects its business to improve in the second half of the year, propping the Philadelphia SE Semiconductor index .SOX, which climbed 1.8%.

All of the 11 major sectors on the S&P 500 were down, with technology shares .SPLRCT falling the least.

Snap Inc SNAP.N tumbled 14.2% after the social media company said it expects current-quarter revenue to decline by as much as 10%.

Facebook parent Meta Platforms Inc META.O dipped0.1% ahead of reporting fourth-quarter results after the bell.

At 12:21 p.m. ET, the Dow Jones Industrial Average .DJI was down 381.36 points, or 1.12%, at 33,704.68, the S&P 500 .SPX was down 25.69 points, or 0.63%, at 4,050.91, and the Nasdaq Composite .IXIC was down 51.42 points, or 0.44%, at 11,533.13.

Dow component Amgen Inc AMGN.O dropped 4.8% as the drugmaker said its fourth-quarter revenue fell slightly, while videogamepublisher Electronic Arts Inc EA.O slumped 12.0% on lowering its annual bookings forecast.

Seventy percent of the 200companies in the S&P 500 that have reportedfourth-quarter earnings have topped Wall Street expectations. Analysts now see earnings of S&P 500 firms declining 2.4% for the quarter, per Refinitiv estimates.

Declining issues outnumbered advancers for a 1.48-to-1 ratio on the NYSE and for a 1.13-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and no new low, while the Nasdaq recorded 75 new highs and 21 new lows.

U.S. corporate earnings - Q4 2022https://tmsnrt.rs/40wWr8b

Reporting by Johann M Cherian and Shreyashi Sanyal in Bengaluru; Additional reporting by Ankika Biswas; Editing by Sriraj Kalluvila and Maju Samuel


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