Traders work on the floor of the New York Stock Exchange (NYSE), July 26, 2023.
Brendan McDermid | Reuters
Stocks retreated on Tuesday as Wall Street awaited the results of this week’s Federal Reserve policy meeting.
The Dow Jones Industrial Average lost 223 points, or 0.7%. The S&P 500 slid 0.7%, while the Nasdaq Composite dropped 1%.
Deere, often seen as a barometer of future economic activity, fell more than 2% in the session. The drop came after Evercore ISI downgraded the stock to in-line from outperform due to agricultural production cuts.
The central bank’s two-day meeting begins on Tuesday. The Fed is not expected to raise rates when announcing its decision Wednesday, with traders pricing in a 99% probability that the central bank skips a hike, according to CME Group’s FedWatch tool, a gauge of pricing in fed funds futures. Traders are putting just a 29% chance of a hike in November.
The Fed will also offer economic forecasts on Wednesday. Investors will watch for commentary around the path of inflation and future path of interest rates.
“The Fed remains focused on engineering a soft landing in the US economy,” said Joseph Gaffoglio, president of mutual at America Capital Management. “Though consumer spending stayed strong through the summer months, we anticipate that spending will begin to slow, as excess savings from stimulus payments received during the pandemic finally run out, and many younger Americans face the prospect of restarting student loan payments.”
Oil prices advanced on Tuesday. The rise in prices helped energy stocks within the S&P 500 mitigate losses in the session.
Leadership of the striking United Auto Workers union said more workers could be called on to withhold labor if progress is not made by a Friday deadline. Stellantis climbed about 2% in Tuesday’s session, while General Motors and Ford advanced around 0.8% and 0.1%, respectively.
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