Wall Street falls as tech drags, Fed meeting eyed

U.S. stocks slid on Monday as technology shares fell in the run up to earnings from tech companies, which will test the impact of trade tensions on global growth, and ahead of the Federal Reserve’s policy-setting meeting.

The S&P 500 technology sector .SPLRCT, the index’s best performer so far this year dropped 0.70%. However, a rise in shares of Apple Inc, ahead of its quarterly report after markets close, helped support the blue-chip Dow Industrials indexI.

While Refinitiv data shows 76% of the 222 S&P 500 companies that have reported earnings so far have topped profit estimates, data on the U.S. economy went in the opposite direction, supporting action by the Fed on Wednesday.

A quarter point cut to bolster the amount of capital coursing through financial markets and support borrowing by ordinary Americans is fully priced in for Wednesday and it will be policymakers’ comments on what next that should define whether a rally since May continues.

“The key question facing investors now is whether the Fed can get away with a small number of insurance cuts or whether it will be pushed towards a more fundamental loosening of policy,” Neil Shearing, group chief economist at Capital Economics, said in a note.

Among other stocks, Mylan NV jumped 13.87% after it confirmed reports over the weekend that it was combining with Pfizer Inc’s off-patent branded and generic established medicines business to form a new global player.

Pfizer fell 2.28% after the drug maker slashed its full-year profit and revenue forecast in an unexpected release of its quarterly results to go with the deal announcement.

At 10:17 a.m. ET the Dow Jones Industrial Average was up 15.83 points, or 0.06%, at 27,208.28, the S&P 500 was down 9.05 points, or 0.30%, at 3,016.81 and the Nasdaq Composite was down 73.74 points, or 0.89%, at 8,256.47.

Weighing on the tech-heavy index were declines in shares of heavyweights Amazon.com Inc  and Microsoft Corp .

Hopes that the Fed would take a more dovish approach to counter the impact of a protracted U.S.-China trade war has helped Wall Street’s main indexes scale record levels this month.

But the market’s recovery from a torrid month of trading in May have also been dependent on other indicators like earnings not being so robust as to make the Fed hold fire.

Markets will see a 25 bps cut as a happy medium, an indication that things aren’t that bad, said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Declining issues outnumbered advancers for a 1.33-to-1 ratio on the NYSE and for a 1.73-to-1 ratio on the Nasdaq.

The S&P index recorded 24 new 52-week highs and no new low, while the Nasdaq recorded 40 new highs and 54 new lows.