Getty Images / Mario Tama
- US stocks dipped Tuesday as investors braced for the Fed's next interest rate move.
- Investors are pricing in a near-100% chance rates will be kept level on Wednesday.
- All three benchmark indexes ended the day lower, with the Dow losing over 100 points.
Stocks slumped Tuesday ahead of the Federal Reserve's next interest rate move. All three benchmark indexes ended the day in the red, with the Dow losing over 100 points as central bankers deliberated over their next policy decision.
Markets are pricing in a 99% chance central bankers will choose to keep interest rates level on Wednesday. But some traders are still expecting one more interest rate hike before the end of the year, with markets pricing in a 40% chance that rates will end 2023 higher than their current level. Fed Chair Jerome Powell has previously warned that rates could stay higher for longer than markets are anticipating.
"We see little in the latest numbers to alter our view that the Fed will be unwilling to declare 'mission accomplished' in its fight against inflation until the labor market softens and wage pressures move to a range of 3.5 percent or lower for a sustained period," Brent Schutte, the chief investment officer of Northwestern Mutual Wealth Management, said in a note on Monday.
"Unfortunately, leaving rates at the current restrictive level is likely to lead to a shallow and short-lived recession, in our view," he later added, though he noted that the Fed had plenty of room to ease monetary policy should a recession start.
Meanwhile, oil prices stuck around near 10-month highs as traders assessed the outlook for tight crude supply. Brent crude, the international benchmark, traded around $94 a barrel on Tuesday, while West Texas Intermediate crude briefly traded around $93 a barrel, the highest oil prices have been since November of last year.
Here's where US indexes stood at the 4:00 p.m. closing bell on Tuesday:
- S&P 500: 4,444.04, down 0.21%
- Dow Jones Industrial Average: 34,518.26, down 0.31% (-106.04 points)
- Nasdaq Composite: 13,678.19, down 0.23%
Here's what else happened today:
- Key barometer of economic health is flashing more warning signs for China's economy.
- US housing starts fell to the lowest level since 2020, a worrying sign for the economy.
- Russia's energy trade is making a comeback as global crude prices soar.
- Tech stocks could rally through the end of the year, as a "tidal wave"of AI spending will drive a new bull market, according to Wedbush's Dan Ives.
- The stock market is currently a "really good deal" for investors trying to build wealth, Wharton professor Jeremy Siegel said.
- What Jerome Powell says now matters more than what he actually does.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil rose 0.19% to $91.65 a barrel. Brent crude, the international benchmark, inched higher 0.18% to $94.60 a barrel.
- Gold edged lower to $1,952.80 per ounce.
- The yield on the 10-year Treasury bond rose four basis points to 4.635%.
- Bitcoin rose 1.49% to $27,140.