New York, Sep 19 (The Street Press) – Wall Street had a tough day on Tuesday as investors played it safe while the U.S. Federal Reserve met for its important two-day meeting to talk about money stuff.
All three stock market indexes ended the day down as many people sold their stocks before the Fed’s big announcement on Wednesday. Most folks think the Fed will decide to keep interest rates the same.
Bill Northey, a senior investment director at U.S. Bank Wealth Management in Helena, Montana, highlighted the significance of tomorrow’s events. He said that Tomorrow is a big deal, and everyone’s watching closely for any changes in how the Federal Reserve talks. He also expects a lot of attention on how the Fed views inflation during the post-meeting press conference.
Northey noted that inflation has shown noticeable improvement over the past year, but he believes that reaching the Federal Reserve’s 2% target for inflation might be challenging in the final stretch.
In addition to the interest rate decision, the Fed will unveil its Summary Economic Projections, including the dot plot, which will offer insights into the Federal Open Markets Committee’s outlook on interest rates, inflation, and economic growth.
Michael Green, the chief strategist at Simplify Asset Management in Philadelphia, explained the current market sentiment. He said that right now, the market expects the Fed to hit the brakes temporarily but is worried they might keep rates high for a longer time. He added that if the Fed were to signal that they’re not planning rate cuts in 2024 by raising the dot plot, it would be viewed as a very cautious approach.
According to CME’s FedWatch tool, financial markets have already factored in a nearly certain 99% chance that the central bank will keep its key Fed funds target rate between 5.25% and 5.00% during this week’s meeting. Moreover, there’s a growing 70.9% probability that the Fed will maintain this stance at its next meeting in November.
Economic developments are also adding to investor uncertainty. Canada’s annual inflation rate increased due to higher gasoline prices, and there was a larger-than-anticipated drop in U.S. housing starts.
Meanwhile, the IPO market, which has been slow, is starting to pick up. Grocery delivery app Instacart’s parent company, Maplebear Inc, recently made its debut on the Nasdaq. This comes shortly after chipmaker Arm Holdings had a successful entry into the public marketplace last week.
Maplebear shares surged by 12.3%, showing strong gains, while Arm Holdings experienced a 4.9% decline. In the broader market, the Dow Jones Industrial Average dropped 106.57 points, or 0.31%, closing at 34,517.73. The S&P 500 also saw a decline of 9.58 points, or 0.22%, ending at 4,443.95. The Nasdaq Composite was down 32.05 points, or 0.23%, closing at 13,678.19.
Among the 11 major sectors of the S&P 500, nine ended the session in the red, with the energy sector and consumer discretionary sector experiencing the largest percentage declines.
Walt Disney saw a decline after revealing plans to nearly double its capital spending on its parks business in the next decade.
Starbucks faced losses as TD Cowen downgraded the coffee chain’s shares to “underperform”.
Automakers General Motors and Ford Motor Co made gains as the United Auto Workers union threatened more strikes on Friday if negotiations with automakers didn’t progress significantly.
On the NYSE, declining stocks outnumbered advancing ones with a ratio of 1.67 to 1, while on Nasdaq, decliners had a 1.47 to 1 advantage.The S&P 500 saw seven new 52-week highs and nine new lows, while the Nasdaq Composite had 33 new highs and 257 new lows.
Trading volume on U.S. exchanges reached 9.60 billion shares, slightly below the 10.05 billion average for the last 20 trading days.