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US stocks close lower as investors take cover ahead of Fed decision

  • Maplebear shares rise on debut
  • Disney falls after doubling parks investment plan
  • Canadian inflation is rising due to higher gasoline prices
  • Indices in the red: Dow 0.31%, S&P 0.22%, Nasdaq 0.23%

NEW YORK, Sept 19 (Reuters) – Wall Street lost ground on Tuesday as risk-off sentiment faded as the U.S. Federal Reserve convened for its highly anticipated two-day monetary policy meeting.

All three indexes ended the session in the red, leading to a broad sell-off ahead of the Fed’s interest rate announcement on Wednesday, which is expected to culminate in the decision to keep interest rates unchanged.

“There are big events coming up tomorrow and the markets are clearly focused on any change in Federal Reserve communications,” said Bill Northey, senior investment director at US Bank Wealth Management in Helena Montana, who has a “heavy focus on the Fed’s perspective.” expected on inflation in the post-meeting press conference.”

“General inflation readings have shown significant progress over the last year,” Northey added. “But the last mile of inflation will likely be more difficult, pushing it back toward the Federal Reserve’s 2% target.”

The Fed will also release its summary economic forecasts, including its dot plot, which are intended to provide insight into the Federal Open Markets Committee’s forecast trends in interest rates, inflation and economic growth.

“What the market is pricing in is a pause, but an increased risk that rates will remain high for longer,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia. “If (the Fed) announced that it would unwind the rate cuts in 2024 by raising the dot chart, that would generally be viewed as a very hawkish pause.”

Financial markets have priced in a near-certain 99% chance that the central bank will keep its benchmark interest rate at 5.25% to 5.00% on Wednesday and a growing 70.9% chance that it will at its next meeting will hold in November, according to CME’s FedWatch tool.

On the economic front, a rise in Canada’s annual inflation rate due to rising gasoline prices and a sharper-than-expected drop in housing starts in the U.S. helped increase investor uncertainty.

The sluggish IPO market continues to show signs of life: Parent company Maplebear Inc (CART.O), grocery delivery app Instacart, is making its Nasdaq debut just days after chipmaker Arm Holdings pulled off a stellar initial public offering last week.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 29, 2023. REUTERS/Brendan McDermid/File Photo Acquire License Rights

Maplebear shares rose 12.3%, while Arm Holdings lost 4.9%.

The Dow Jones Industrial Average (.DJI) fell 106.57 points, or 0.31%, to 34,517.73, the S&P 500 (.SPX) fell 9.58 points, or 0.22%, to 4,443.95 and the Nasdaq Composite (.IXIC) fell 32.05 points, or 0.23%, to 13,678.19.

Of the S&P 500’s 11 major sectors, nine ended the session in the red, with energy (.SPNY) and consumer discretionary (.SPLRCD) suffering the largest percentage declines.

Walt Disney (DIS.N) fell after the company said it would nearly double capital spending on its parks business over the next 10 years.

Starbucks (SBUX.O) lost ground after TD Cowen decided to downgrade the coffee chain’s shares to Underperform.

Automakers General Motors (GM.N) and Ford Motor Co (FN) made headway as the United Auto Workers union planned to announce further strikes on Friday if serious progress is not made in ongoing talks with the automakers.

Declining issues outnumbered advancing issues on the NYSE by a ratio of 1.67 to 1; On the Nasdaq, a ratio of 1.47 to 1 favored the decliners.

The S&P 500 posted seven new 52-week highs 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 with the full-session average of 10.05 billion over the last 20 trading days.

Reporting by Stephen Culp; Additional reporting by Ankika Biswas and Shristi Achar A in Bengaluru; Editing by Aurora Ellis

Our standards: The Thomson Reuters Trust Principles.

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