NEW YORK -Wall Street lost ground on Tuesday as sentiment on risks weighed as the US Federal Reserve convened for its much-anticipated two-day monetary policy meeting.
All three indexes ended the session lower in a broad sell-off ahead of the Fed’s interest rate announcement on Wednesday, which is expected to culminate in a decision to leave key interest rates unchanged.
“It’s a big setup that tomorrow and marketThey are clearly focused on any change in the Federal Reserve’s communications,” said Bill Northey, senior investment director at US Bank Wealth Management in Helena Montana, who expects “intense attention to the Fed’s perspective on inflation in the press conference after the meeting. ”
“Overall inflation rates have shown clear progress over the past year,” Northey added. “But the last mile of inflation is likely to be more challenging, bringing it back close to the Federal Reserve’s target of 2 percent.”
The Fed will also soon release its Summary Economic Projections, including its dot plot, which should provide a glimpse into the Federal Open Markets The Committee’s forecast trajectory of interest rates, inflation and economic growth.
“What is included in the price? market is a pause, but a greater risk that rates will stay higher for longer,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia. “If (the Fed) were to announce that they will eliminate rate cuts in 2024 by raising the dot chart, that would generally be seen as a very aggressive pause.”
Financial markets have priced in a near-certain 99 percent probability that the central bank will leave its key Fed Funds target rate at 5.25-5 percent on Wednesday, and a growing 70.9 percent probability that it will hold at the next meeting in November. according to CME’s FedWatch tool.
On the economic front, a rise in annual inflation in Canada due to rising gasoline prices and a larger-than-expected decline in U.S. housing market starts have fueled investor uncertainty.
The slow IPO market continues to show signs of life as Instacart’s parent Maplebear Inc makes its Nasdaq debut, days after chipmaker Arm Holdings’ grand entrance to the public marketplace last week.
Shares of Maplebear rose 12.3 percent, while Arm Holdings lost 4.9 percent.
The Dow Jones Industrial Average fell 106.57 points, or 0.31 percent, to 34,517.73, the S&P 500 lost 9.58 points, or 0.22 percent, to 4,443.95 and the Nasdaq Composite fell 32.05 points , or 0.23 percent, to 13,678.19.
Of the S&P 500’s 11 major sectors, nine ended the session in the red, with energy and consumer discretionary seeing the biggest percentage declines.
Walt Disney slumped after the company announced it would nearly double capital spending on its parks business over the next decade.
Starbucks lost ground after TD Cowen’s decision to downgrade the coffee chain’s shares to ‘underperform’.
Automakers General Motors and Ford Motor Co advanced as the United Auto Workers union planned to announce more strikes on Friday if serious progress is not made in ongoing talks with automakers.
Declining issues outnumbered advancing issues on the NYSE by a 1.67-to-1 ratio; on the Nasdaq, a 1.47-to-1 ratio favored the decliners.
The S&P 500 recorded seven new highs in the past 52 weeks and nine new lows; the Nasdaq Composite recorded 33 new highs and 257 new lows.
Volume on U.S. exchanges was 9.60 billion shares, compared to the full-session average of 10.05 billion over the past 20 trading days.
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