By Susan Mathew and Devik Jain
(Reuters) - U.S. stocks fell on Wednesday, with the tech-heavy Nasdaq leading losses after stronger-than-expected retail sales data gave the Federal Reserve more ammunition to tighten policy, while geopolitical tensions over Russia and Ukraine added to caution.
Technology and communication services led the declines among the 11 major S&P sectors. The energy index was the sole gainer, up 1.4%, as crude prices rose amid tensions around a possible Russian move on Ukraine remaining high. [O/R]
The United States and NATO said Russia was still building up troops around Ukraine despite Moscow's insistence it was pulling back.
"The fact that (U.S. President Joe) Biden and NATO remain somewhat skeptical about this is causing investors to rethink this geopolitical problem. The worry still remains," said Peter Cardillo, chief market economist at Spartan Capital Securities.
Markets have seen wild swings over the last few sessions, driven by geopolitical headlines. The CBOE volatility index had hit three-week highs earlier this week before retreating.
At 12:49 p.m. ET, the Dow Jones Industrial Average was down 279.01 points, or 0.80%, at 34,709.83, the S&P 500 was down 31.72 points, or 0.71%, at 4,439.35, and the Nasdaq Composite was down 164.62 points, or 1.16%, at 13,975.13.
Shares of big banks fell, with Morgan Stanley (NYSE:MS) down 2.4%, while those of major growth names Apple Inc (NASDAQ:AAPL), Google-owner Alphabet (NASDAQ:GOOGL) Inc, Amazon.com Inc (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc and Tesla Inc (NASDAQ:TSLA) slipped between 0.8% and 3.1% after rallying strongly on Tuesday.
Some underwhelming earnings reports also weighed on markets, with shares of ViacomCBS dropping 21.8% after the media conglomerate missed profit forecast, while announcing a change in its name to Paramount and unveiling a broad range of programming.
Focus now is on minutes of the Federal Reserve's meeting held last month for more clues on the central bank's plans to trim its massive balance sheet and hike interest rates.
Retail sales rebounded sharply in January, while production at U.S. factories increased moderately, separate data showed, strengthening the case for a hawkish Fed in March.
"If the consumer can absorb, continue to spend and thrive throughout this inflationary period, that gives the Federal Reserve more leeway to be aggressive in its monetary policy," said Keith Buchanan, portfolio manager at Globalt Investments in Atlanta.
Bets were spilt almost equally between expectations for a 25 and 50 basis points hike in March, according to CME Group's (NASDAQ:CME) Fedwatch tool.
Waning benefits from stay-at-home demand saw Canadian e-commerce firm Shopify (TSX:SHOP) slump 17.6% after it forecast a slowing pace in first-half revenue growth, while Roblox Corp tumbled 25.9% as the gaming platform missed analysts' expectations for quarterly bookings.
Airbnb (NASDAQ:ABNB), meanwhile, rose 4.1% after the short-term home rental company forecast better-than-expected first-quarter revenue on strong travel demand and longer stays.
Devon Energy Corp (NYSE:DVN) gained 6.7% after the oil producer reported fourth-quarter results above Wall Street estimates.
Declining issues outnumbered advancers for a 1.10-to-1 ratio on the NYSE and for a 1.78-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and 6 new lows, while the Nasdaq recorded 39 new highs and 76 new lows.