US STOCKS-Tech stocks drag Wall Street lower ahead of Fed meeting

U.S. stock indexes fell on Tuesday as a selloff in technology firms ahead of the Federal Reserve's policy meeting overshadowed upbeat results from blue-chip companies including IBM and Johnson & Johnson. The S&P 500 index had briefly declined as much as 10.6% from its Jan. 3 closing peak, flirting with a correction for the second time this year before clawing back some lost ground in early afternoon trading.

U.S. stock indexes fell on Tuesday as a selloff in technology firms ahead of the Federal Reserve's policy meeting overshadowed upbeat results from blue-chip companies including IBM and Johnson & Johnson.

The S&P 500 index had briefly declined as much as 10.6% from its Jan. 3 closing peak, flirting with a correction for the second time this year before clawing back some lost ground in early afternoon trading. The index is now down 9.7% from its peak. A correction would be confirmed if the index closes 10% or more below its record closing level.

The Fed will announce its policy statement on Wednesday at 2:00 pm ET (1900 GMT), which will be watched closely for cues on the central bank's timeline for hiking key interest rates to combat inflation. Fed funds futures traders are pricing in a 25 basis points hike in March, in addition to three more rate increases by the end of the year.

"The market is being re-rated by investors as they consider changes in Fed policy, earnings growth and economic growth slowing from last year," said Nancy Tengler, chief investment officer of Nashville-based asset manager Laffer Tengler Investments. "We've had three years of super return and now we're just seeing investors going in and adjusting their portfolio."

At 12:23 p.m. ET, the Dow Jones Industrial Average was down 255.11 points, or 0.74%, at 34,109.39, the S&P 500 was down 71.15 points, or 1.61%, at 4,338.98, and the Nasdaq Composite was down 355.49 points, or 2.57%, at 13,499.64. Ten of the 11 major S&P 500 sectors declined, with energy stocks being the outlier thanks to a 2.6% gain in oil prices as Ukraine-Russia tensions sparked supply concerns.

A U.S. plane carrying military equipment and munitions landed in Kyiv earlier in the day to shore up Ukraine as it braces for a possible military offensive from Moscow. "With risks around Ukraine to keep lingering and the Fed set to confirm a significantly more hawkish stance, volatility is likely to remain elevated near term," said Thomas Hempell, head of macro & market research, Generali Investments.

"As the global recovery continues and corporate earnings grow further (if more slowly), the recent correction will ultimately offer buying opportunities." The fourth-quarter earnings season has started off on a mixed note, with all eyes now on mega-cap growth company Microsoft's earnings after market close on Tuesday, followed by Apple and Tesla later this week.

Earnings from S&P 500 companies are expected to grow 24.1% year-over-year, according to IBES estimates from Refinitiv. Dow components American Express and IBM gained 7.4% and 3.5%, respectively, after posting strong fourth-quarter results.

Johnson & Johnson rose 2.2% after the drugmaker forecast as much as $3.5 billion in sales of its COVID-19 vaccine in 2022. General Electric Co tumbled 6.6% after the industrial conglomerate reported a decline in quarterly revenue amid persistent global supply chain disruptions.

Declining issues outnumbered advancers by a 2.57-to-1 ratio on the NYSE and a 2.74-to-1 ratio on the Nasdaq. The S&P index recorded 2 new 52-week highs and 4 new lows, while the Nasdaq recorded 9 new highs and 102 new lows.