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Wall Street moves sideways as investors look to the Fed

  • Tesla and VF Corp are weighing on the consumer discretionary sector
  • Arm Holdings sinks as Bernstein begins reporting
  • PayPal slides after stock downgrade
  • Indices rise: Dow 0.02%, S&P 0.07%, Nasdaq 0.01%

NEW YORK, Sept 18 (Reuters) – Wall Street closed little changed on Monday as market participants awaited the Fed’s expected decision to keep interest rates unchanged on Wednesday.

All three major U.S. stock indexes ended a choppy session with nominal gains as investors showed little conviction with few catalysts ahead of the Fed’s two-day policy meeting.

“(Fed Chairman Jerome) Powell can trigger big moves in either direction with his comments, and you don’t want to get caught on the wrong side,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The central bank has vowed to remain nimble on economic data, showing signs that core inflation remains on its meandering descent back toward the Fed’s annual 2% target and suggesting that the U.S. economy continues to stands on a solid foundation.

Against this backdrop, growing fears that a standoff on Capitol Hill could lead to a possible government shutdown made market participants nervous.

Treasury Secretary Janet Yellen said Monday that while she saw no risk of an economic downtown, she warned that a government shutdown would “create a situation that could lead to a loss of momentum is something we don’t need to be a risk.” Job.”

The main event of the week is the Fed’s policy meeting, which is expected to culminate in a pause in interest rate hikes and leave the Fed Funds target rate unchanged for the second time since March 2022, when the central bank fired its opening salvo in its fight against inflation.

The Federal Open Markets Committee (FOMC) will also release its quarterly summary of economic forecasts, which will include the “dot plot,” or insight into participating members’ expectations regarding the future direction of interest rates.

Financial markets are currently 99% certain that the Fed will leave interest rates at 5.25% to 5.00% on Wednesday. Furthermore, the development is less certain, as the probability of the FOMC holding in November is 69%, according to CME’s FedWatch tool.

“The market would like the dot plot to be lower than last time,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “Bad news is good news. Most people would say it would be good if the summary economic forecasts predicted a slowdown next year as they gauge the timing of a possible Fed turnaround.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 11, 2023. REUTERS/Brendan McDermid ACQUIRES LICENSE RIGHTS

On the other hand, the possibility that the slowdown could turn into a recession remains a key concern.

“Investors are questioning the likelihood of a slowdown versus a hard landing and wondering whether things could be worse than forecasters are currently predicting,” Stovall added.

The Dow Jones Industrial Average (.DJI) rose 6.06 points, or 0.02%, to 34,624.3, the S&P 500 (.SPX) rose 3.21 points, or 0.07%, to 4,453.53 and the Nasdaq Composite (.IXIC) rose 1.90 points, 0.01%, to 13,710.24.

Energy stocks (.SPNY), buoyed by rising crude oil prices, rose the most across the S&P 500’s 11 major sectors, while consumer discretionary stocks (.SPLRCD) suffered the largest percentage decline, with Tesla Inc (TSLA.O) the most burdened.

VF Corp (VFC.N) fell 4.6% after Piper Sandler downgraded the apparel company’s shares to “neutral” from “overweight.”

British chipmaker Arm Holdings fell 4.5% after Bernstein initiated coverage with an “underperform” rating just days after its stellar debut.

Paypal Holdings fell 2.0% after MoffettNathanson cut its rating to “market perform” from “outperform.”

Declining issues outnumbered advancing issues on the NYSE by a ratio of 1.22 to 1; On the Nasdaq, a ratio of 1.74 to 1 favored the decliners.

The S&P 500 posted 6 new 52-week highs and 11 new lows; The Nasdaq Composite recorded 37 new highs and 247 new lows.

Volume on U.S. exchanges was 9.44 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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