S&P 500 takes hit from Google rout, hawkish Fed speak

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By Yasin Ebrahim

Investing.com -- The S&P 500 fell Wednesday, as a rout in Google (NASDAQ:GOOGL) wounded tech and Federal Reserve officials continued higher for longer interest rates to quell inflation.

The S&P 500 fell 1%, the Dow Jones Industrial Average fell 0.62%, or 211 points, the Nasdaq was down 1.6%

Google held an event to promote the launch of its new artificial intelligence chatbot ‘Bard,’ but the AI chatbot reportedly delivered inaccurate answers in an online advertisement just ahead of the event.

In response to the glitch, Google said it will use external feedback and its own testing to ensure Bard’s responses “meet a high bar for quality, safety and groundedness in real-world information.” 

Sentiment on big tech was soured further by ongoing remarks from Fed members who continue to talk up the long road ahead to stable inflation that will likely require further rate hikes.

Federal Reserve Governor Christopher Waller warned of a “long fight” to curb inflation that could require “interest rates higher for longer than some are currently expecting."

The remarks echoed that of New York Fed President John Williams who said the Fed “needs to do more” to cool inflation, though added that the recent shift in market bets for two further rate hikes was “still a reasonable view."

Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META) were in the red, but Microsoft (NASDAQ:MSFT) - still riding high on optimism about its plans to integrate ChatGPT into its search engine, Bing, as well other products – was flat.

On the earnings front, meanwhile, Uber Technologies Inc (NYSE:UBER) was the standout performer, rising more than 6% after the ride-hailing company reported a surprise fourth-quarter profit and upbeat guidance.

“This was a major step in the right direction for Uber with a profitable growth story into 2023 and beyond,” Wedbush said as it lifted its price target on the stock to $40 from $38 a share.

Chipotle Mexican Grill (NYSE:CMG), meanwhile, fell more than 5% after reporting weaker-than-expected quarterly results, weighed down by softer demand during the holiday quarter.

Under Armour (NYSE:UAA) reported quarterly results that beat on both the top and bottom lines, but its shares fell 10% as promotional activity is expected to continue to weigh on gross margins just as inventories continue to grow.

Energy, meanwhile, was pressured by a slide in APA Corporation (NASDAQ:APA), EQT Corporation (NYSE:EQT), and Chevron Corp (NYSE:CVX), though higher oil prices, underpinned by a stronger dollar, helped keep losses in check.