Fears of an overheating economy and a recent hike in interest rates mean investors are closely watching the two-day US Federal Reserve policy meeting.
The S&P 500 ended lower on Tuesday, weighed down by energy and industrials stocks as investors awaited the outcome of the two-day US Federal Reserve policy meeting.
The US stock market lacked direction for much of the day after the S&P 500 and Dow Jones Industrial Average closed at record highs on Monday. Wall Street has recently benefited from optimism over a $ 1.9 trillion fiscal stimulus package and ongoing vaccination campaigns that have reinforced views that the economy is on the road to recovery.
At the same time, fears of economic overheating and a recent hike in interest rates have tightened control over the two-day Fed meeting, during which policymakers are likely to raise economic forecasts and to reiterate their commitment to remain accommodating for the foreseeable future.
The Nasdaq ended higher. Apple Inc rose 1.3% after Evercore ISI raised its price target for the iPhone maker’s shares to the highest among analysts covering the company, according to data from Refinitiv.
Wall Street’s fear gauge hit a five-week low at 19.68 points. A mid-afternoon rise in the 10-year Treasury yield to 1.62% stifled some enthusiasm for high-growth stocks. The benchmark 10-year US Treasury hit a 13-month high last week.
Investors increased their cash allocation slightly, believing that inflation and “crisis crises” could reverse the record rally in financial markets, Bank of America fund managers’ survey in March showed on Tuesday.
“This Fed meeting has been one of the most important for the market for a long time. This is the first we have had after the recent rise in the inflation rate and concerns about inflation, ”said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.
Data showed retail sales fell more than expected in February due to extremely cold weather across the country. Another report said winter storms in Texas caused production at US factories to drop last month.
The Dow Jones Industrial Average fell 0.39% to close at 32,825.95 points, while the S&P 500 lost 0.16% to 3,962.71.
The Nasdaq Composite Index edged up 0.09% to 13,471.57.
After falling 11% from its February 12 high until early March, the Nasdaq has mostly recovered and is now down about 4% from its record close.
Volume on the U.S. exchanges was 12.2 billion shares, up from 14.4 billion on average for the full session over the last 20 trading days.
The S&P 500 energy index fell nearly 3% after lower oil prices, while financials and industrials also fell more than 1%. The communications services and technology indexes both rose more than 0.7%.
The Russell Growth Index rose 0.37%, while the Russell Stock Index fell 0.71% in a reversal of a recent trend away from technology and other stocks to high increase.
Ford Motor Co fell 5.4% after announcing a $ 2 billion convertible debt deal.
Falling issues outnumbered rising issues on the New York Stock Exchange by a ratio of 1.77 to 1; on the Nasdaq, a ratio of 2.31 to 1 helped the declines.
The S&P 500 posted 63 new 52-week highs and no new lows; the Nasdaq Composite recorded 220 new highs and 22 new lows.