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NEW YORK: Wall Street stocks started an eventful week on a downcast note in Monday (Jan 30), retreating ahead of key central bank announcements and corporate earnings.

Analysts pointed to profit taking as a factor in the bruising session after equities spent much of January pushing higher.

“People are getting out of long positions in stocks, particularly in the tech sector which has led the recent rally,” said Karl Haeling of LBBW. “People are taking some risk off.”

The Dow Jones Industrial Average fell 260.99 points, or 0.77%, to 33,717.09, the S&P 500 lost 52.79 points, or 1.30%, to 4,017.77 and the Nasdaq Composite dropped 227.90 points, or 1.96%, to 11,393.81.

“The market has had a big run and the trading is a bit more cautious heading into a week which likely will be an inflection point for the overall market,“ said Keith Lerner, co-chief investment officer at Truist Advisory Services.

This week’s calendar includes several major central bank announcements, with the Federal Reserve set to unveil its rate decision on Wednesday.

The US central bank is seen raising the Fed funds rate by 25 basis points at the end of its two-day policy meeting, following a 2022 in which the Fed aggressively boosted rates to control soaring inflation.

Fed chair Jerome Powell’s news conference will be scrutinised for whether the rate-hiking cycle may be coming to a close and for signs of how long rates could stay elevated.

“It’s probably one of the most important meetings since the whole thing began,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “Unless the Fed extends that timeline meaningfully from what the market expects, which is that the Fed will be done in the next meeting or two, this may end up marking the pause, so to speak.”

Analysts expressed unease after Spanish consumer prices unexpectedly accelerated, raising worries about a European Central Bank meeting later in the week. The bank is expected to deliver another large rate increase on Thursday.

The economic agenda also includes quarterly results from tech heavyweights such as Apple and Amazon, as well as from industrial companies including ExxonMobil and General Motors.

Earnings have generally topped expectations so far, but investors have been troubled by downbeat forecasts by many companies, said Hugh Johnson of Hugh Johnson Economics.

With more than 140 companies having reported so far, S&P 500 earnings are expected to have fallen 3% in the fourth quarter compared with the prior-year period, according to Refinitiv IBES. – AFP, Reuters

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