Nasdaq slides 2% as tech rout deepens ahead of Fed minutes

The Nasdaq slumped 2% on Wednesday as tech stocks extended their selloff for a second straight day on mounting concerns over aggressive actions by the Federal Reserve to fight inflation, with minutes from the central bank's March meeting on tap.

Shares of megacap growth companies such as Microsoft , Apple and Amazon.com tumbled between

2.2% and 3.3%, dragging down the Nasdaq and the S&P 500.

High-growth stocks, whose valuations stand to be pressured by higher bond yields, bore the brunt as the benchmark 10-year yield hit a three-year high.

Fed Governor Lael Brainard said on Tuesday she expected a combination of interest rate hikes and a rapid balance sheet runoff, sparking losses on Wall Street.

"The pre-earnings rally has now been somewhat cut short due to surging yields and a very strong dollar," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"The Fed minutes today will likely show an even more hawkish attitude by the Fed members. I think they'll point to a half-a-percent rise next month."

The Federal Open Market Committee's minutes, set to be released at 2 p.m. ET (1800 GMT), could indicate how fast and how far policymakers will proceed in trimming several trillion dollars from the stash of assets purchased to stabilize financial markets through the pandemic.

While estimates of the impact vary, Fed Chair Jerome Powell after the March meeting said the reductions might have the same effect as an additional quarter-point increase in short-term rate.

Traders now see 83.1% odds of a 50 basis points rate hike at the central bank's meeting next month.

The CBOE Volatility index, also known as Wall Street's fear gauge, rose to 24.36 points, its highest since March 21.

U.S. stock markets had a rough start to the year as the prospects of a more hawkish Fed weighed on growth shares, while the war in Ukraine compounded worries over rising inflation.

The United States targeted Russian banks and elites with a new package of sanctions on Wednesday that includes banning any American from investing in Russia, after Washington and Kyiv accused Moscow of committing war crimes in Ukraine.

At 10:17 a.m. ET, the Dow Jones Industrial Average was down 237.28 points, or 0.68%, at 34,403.90, the S&P 500 was down 54.20 points, or 1.20%, at 4,470.92, and the Nasdaq Composite was down 328.14 points, or 2.31%, at 13,876.03.

Among other stock movers, JetBlue Airways Corp slid 8.4% after the carrier said it made an unsolicited $3.6 billion bid for Spirit Airlines Inc, potentially snarling merger plans between the ultra-low-cost carrier and Frontier Group Holdings Inc.

Frontier Group and Spirit Airlines fell 10.2% and 3.0%, respectively.

Declining issues outnumbered advancers for a 3.70-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 4.80-to-1 ratio on the Nasdaq.

The S&P index recorded 26 new 52-week highs and 21 new lows, while the Nasdaq recorded 17 new highs and 154 new lows.