Wall St tumbles after Powell urges caution on rate cuts
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Retail sales rise 0.4% in October, above forecasts
Indexes on track for weekly losses
Vaccine makers, packaged food cos fall after RFK Jr. appointment
Applied Materials down after forecasting Q1 revenue below estimates
Indexes down: Dow 0.72%, S&P 500 1.23%, Nasdaq 2.03%
Updated at 11:50 a.m. ET/1650 GMT
By Lisa Pauline Mattackal and Purvi Agarwal
Nov 15 (Reuters) - The Nasdaq and the S&P 500 were set for their worst session in over two weeks on Friday,after comments from Federal Reserve ChairJerome Powell pointed to a slower pace of interest-ratecuts.
Powell on Thursday pointedto ongoing economic growth, a solid job market, and inflation above the Fed's 2% target asreasons the central bank can afford to be careful with the pace and scope of future rate cuts.
Traders increased bets the Fed will keep rates on hold at its December meeting, pricing in a 38% chance, compared with 14% a month ago, according to theCME FedWatch tool. They also dialedback expectations for easing in 2025.
That view was reinforced by economic data on Friday showingU.S. retail sales increased slightly more than expected in October, pointing to further economic strength, while import prices rebounded.
Rate-sensitivemegacaps fell as Treasury yields rose, with Nvidia NVDA.O and Amazon.com AMZN.O down more than 3% each, while the information technology index .SPLRCT dropped 2.3%.
All three major U.S. stock indexes were headed for weekly losses - the Dow 1.2%, the Nasdaq 2.9% and the S&P 500 2% - as market focus shifted from the presidential election to the state of the economyand potential inflation risks under a new administration.
"We can chalk the defensive tone on the market to severalfactors ... valuations and positioning after the outsized post-electionrally last week, the speed that we've seen bond yields go back up ... (and) to what extent the Fed is going to be able to cut into next year," said Timothy Chubb, chief investment officer at Girard, a Univest Wealth Division.
Stocks of vaccine makers and packaged food companies dipped after President-elect Donald Trump selected Robert F Kennedy Jr, who has spread misinformation on vaccines and criticized ultra-processed foods, to head the Department of Health and Human Services.
PepsiCo PEP.O lost 4%. Moderna MRNA.O slumped 8% and Pfizer PFE.N lost 4.5%, while the healthcare sector .SPXHC dropped 1.8% to its lowest since May.
"The uncertainty over the political process is now over ... but the policy uncertainty is robust," said Lauren Goodwin, economist and chief market strategist at New York Life Investments.
The Dow Jones Industrial Average .DJI fell 314.89 points, or 0.72%, to 43,435.97, the S&P 500 .SPX lost 73.22 points, or 1.23%, to 5,875.95, and the Nasdaq Composite .IXIC lost 387.20 points, or 2.03%, to 18,720.45.
The small-cap Russell 2000 index .RUT was down 1%, heading forits fourth consecutive session of declines and itsworst week in over two months.
The Philadelphia SE Semiconductor index .SOX lost 3%, bogged down by a 8.7% decline in Applied Materials AMAT.O after it forecast first-quarter revenue below Wall Street estimates.
Declining issues outnumbered advancers by a 1.93-to-1 ratio on the NYSE and by a 2.56-to-1 ratio on the Nasdaq.
The S&P 500 posted 9 new 52-week highs and 24 new lows while the Nasdaq Composite recorded 26 new highs and 218 new lows.
Monthly change in US retail sales https://reut.rs/4i10zGa
Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Devika Syamnath
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