By Yasin Ebrahim

Investing.com – The S&P 500 stumbled Tuesday, following a rout in big tech as further signs of inflationary pressures stoked investor worries about a hawkish Federal Reserve ahead the central bank’s meeting set for later today.

The dropped 1.3%.  

The tech sector fell dramatically as investors abandoned high-valued growth fears of the market. This is because they are less attractive during periods of rising rates or inflation when a dollar today has a greater value than one that will in the future.

Microsoft (NASDAQ 🙂 led the big tech stock market selloff, falling by about 3%. Alphabet (NASDAQ :), Apple (NASDAQ :), Facebook (NASDAQ 🙂 and Amazon (NASDAQ 🙂 also fell.

After a 0.6% rise in October, the November increase was 0.8%. This is higher than the 0.5% expected by Bloomberg. The largest increase in producer prices since records began to be kept was 9.6%, year-overyear.

Two-day Federal Open Market Committee meeting gets underway. It is expected Wednesday to announce a plan for doubling its rate of bond purchases, tapering down to $30 billion per monthly to give it the ability to raise rates sooner to reduce inflation.

Stifel wrote in a note, “The Fed must act. But after being on the sidelines too long and falling behind it curve, the aggressive actions arguably required to stem the cost backup will likely come with significant consequences for growth.”  

Treasury yields increased against the backdrop of high inflation and wagers on less accommodating Fed policy, which led to some losses being pared from just a few days earlier.

The trend in financials was reversed lower by a rise at Lincoln National (NYSE :), The Travelers NYSE :, and Prudential (NYSE :). Insurers tend to gain from a rising climate.

Energy also remained green despite falling oil prices. There were concerns about how the Omicron variation of Covid-19 would impact travel and affect energy demand.

Tesla (NASDAQ) dropped more than 3 percent, adding to recent losses. Chief executive Elon Musk had sold $906 million additional shares Monday to bring his total to 11.9million.

Meme stocks include GameStop Corp AMC Entertainment (NYSE 🙂 and (NYSE 🙂 both continued to lose gains due to a weakening investor sentiment regarding risky assets.