By Yasin Ebrahim

Investing.com – The S&P 500 moved off lows Monday, but remain under pressure as the tech wreck continued on growing expectations for a faster pace of monetary policy tightening from the Federal Reserve.

They fell 1.1%. The Nasdaq dropped 0.8% or 285 point, and lost 1.3%.

While Tech suffered no loss in the session’s end, it was under pressure and fell by 2% due to expectations of a quicker pace for rate hikes. This is an enemy of growth stocks. Goldman Sachs increased its Fed rate increase forecast by four this year, up from three earlier estimates.

Pointing to “declining labor market slack and “upside inflation risks,” Goldman’s Chief Economist Jan Hatzius said the bank continues “to see hikes in March, June, and September, and have now added a hike in December for a total of four in 2022.” 

The rate-hike outlook comes just a day ahead of Fed Chairman Jerome Powell’s confirmation hearing on Tuesday, when the Fed chief may offer fresh clues on monetary policy.   

Meta Platforms, formerly Facebook, was at the top of tech’s red sea, losing more than 2%. Amazon (NASDAQ), Apple (NASDAQ), and Microsoft (NASDAQ;) also suffered losses. Alphabet, (NASDAQ:), resisted the trend of trading flat.

Semiconductor stocks also had a significant impact on the tech sector. Among the largest decliners were ASML (NASDAQ;), Marvell(NASDAQ:), Lattice Semiconductor, (NASDAQ)).

Outperforming the wider market were the more volatile or valuable areas, such as energy and financials. These are more resilient to an increase in interest rates.

“[T]When interest rates rise, the cheapest stocks are more profitable than those that cost more. Today, energy and financials remain well represented on the list of the cheapest names, while technology remains well represented on the list of the most expensive names,” {{RBC said in a note}}.

“[W]e think the outperformance trade in value/cyclical isn’t done yet,” it added.

Financials fell by about 1% with Wall Street’s major banks trading below the level of the Flatline before the start of Quarterly Earnings Season, which begins on Friday.

JPMorgan (NYSE:), Citigroup (NYSE Wells Fargo (NYSE) will report earnings Friday.

Lululemon Athletica (NASDAQ:) meanwhile warned that the fourth quarter’s results will be affected by the effects of the omicron Covid-19 variation. Lululemon expects fourth quarter adjusted earnings per share to be at the low end in its range from $3.25 to 3.32 and revenue to remain within the range of $2.13 to $2.17 billion.

Zynga, NASDAQ:) was the latest deal news. Take-Two Interactive, a videogame maker, agreed to acquire Zynga in a $12.7 billion deal. It sent its shares above 41%. Take-Two fell 15%.

“We’ve been anticipating a strong start to the year for value/cyclical, followed by a pivot back to growth/secular later in the year,” {{RBC said.}} “So far that’s playing out, and we think the outperformance trade in Value/Cyclical isn’t done yet.”