Written by Sruthi Shankar and Yohan M Cherian

(Reuters) – US stock indexes fell on Monday, led by shares of Tesla (NASDAQ:) and other giant companies, as investors feared that the Federal Reserve’s monetary policy tightening campaign could push the US economy into recession.

Major US indices sold off sharply in December, putting them on course for their worst annual decline since the 2008 financial crisis, after mixed economic data and the Fed’s hawkish stance fueled fears of a recession.

Market heavyweights such as Apple Inc (NASDAQ :), Microsoft Corporation (NASDAQ:) and Amazon.com Inc (NASDAQ::) fell more than 1% on Monday, dragged down by higher Treasury yields. [US/]

Tesla Inc fell 1.6%, reversing strong pre-market gains in the wake of a Twitter poll that showed a majority of users voted for Elon Musk to step down as CEO of the social media platform.

“There is negativity left from the Fed’s more hawkish comments, concerns about where interest rates will end up next year and what that will do to valuations,” said Michael James, senior vice president of institutional equity trading at Wedbush Securities.

“When people adjust their expectations after the Fed meeting, higher rates usually have more of a compressive multiplier for growth stocks.”

The benchmark Nasdaq and the tech-heavy Nasdaq lost more than 2% each last week after Federal Reserve Chairman Jerome Powell signaled further policy tightening, and the central bank predicted interest rates would pass the 5% mark in 2023, a level not seen since 2007. .

Moreover, the upbeat messages sent by three Fed officials, including New York Fed President John Williams last week, confirmed the US central bank’s determination to do what it takes to ease price pressures.

However, money market participants widen by 61% the chance of a 25 basis point rate hike in February to 4.5%-4.75%, with a final rate of 4.84% in May 2023.

Data on the labor market and inflation this week will set the investor mood, providing more clues of a future interest rate hike by the central bank.

At 12:27 p.m. ET, the index was down 76.26 points, or 0.23%, at 32,844.20, and the S&P 500 was down 23.98 points, or 0.62%, at 3,828.38, and down 133.19 points, or 1.24%, at 10,572.22.

Seven of S&P’s 11 major sectors were lower, with discretionary losses in leading consumer, telecoms and technology services.

Meta Platforms fell 2.9% after the European Commission said it could impose a fine of up to 10% of the tech conglomerate’s annual global trading volume if evidence shows a breach of EU antitrust laws.

L3Harris Technologies (NYSE: Inc) lost 3.3% after the US defense contractor said it would buy supersonic engine maker Aerojet Rocketdyne Holdings (NYSE: Inc) for $4.7 billion. Aerojet added 1.6%.

Shares of casino operator Melco Resorts & Entertainment (NASDAQ :), Las Vegas Sands (NYSE: Corp) and Wynn Resorts (NASDAQ) ranged between 1.5% and 10.5% after Macau said on Friday that six casino companies will invest about $15 billion as part of new 10-year contracts it signed to operate in the world. The largest gambling center.

Declining issues outnumbered advancers by 2.10 to 1 on the New York Stock Exchange and 2.35 to 1 on the Nasdaq.

The S&P posted five new highs in 52 weeks and 15 new lows, while the Nasdaq recorded 42 new highs and 335 new lows.