Stocks fell on Tuesday as investors grew concerned that the Federal Reserve may not reduce interest rates this year. The Dow Jones Industrial Average lost 176 points, the S&P 500 slipped 0.2%, while the Nasdaq Composite added 0.2%. Financial names such as American Express and JPMorgan Chase traded lower, along with electric vehicle manufacturer Tesla. However, Apple was one of the few winning stocks of the day.
Investors are worried about a slowing economy, leading to concerns about the central bank’s decision on interest rates. The Federal Reserve kicked off a key two-day policy meeting, with the meeting concluding on Wednesday. Some indicators show signs of a slowing economy, but investors fear that this may not be enough to prompt the central bank to cut rates. JPMorgan’s top equity strategist, Marko Kolanovic, warned that the chances of a rate cut have decreased following a stronger-than-expected May jobs report.
Fed funds futures are indicating no chance of a cut at this week’s meeting or in July, but there is a 66% chance of a rate cut in November. Investors are preparing for a potential hawkish message from the Fed, implying that it may take longer to bring rates down. The key focus for markets will be the Federal Reserve’s dot plot and summary of economic projections. Before the Fed decision on Wednesday, investors will closely follow the consumer price index reading for May.
The bulk of S&P 500 stocks traded lower on Tuesday, with only about 100 names in the index on track for a gain. At the New York Stock Exchange, roughly 1,900 stocks were lower, while only 688 advanced. Concerns about the economy and the Fed meeting led to the overall dip in stock prices. A vote to reinstate a pay package for Tesla CEO Elon Musk also caused the electric vehicle manufacturer’s stock to fall over 2%.
Investors are increasingly concerned about the Fed’s decision on interest rates, with uncertainty surrounding whether or not rates will be cut this year. The market is preparing for a potential hawkish message from the central bank. J.P. Morgan’s top equity strategist warned that the chances of a rate cut have decreased following a positive jobs report. Fed funds futures indicate no chance of a rate cut at this week’s meeting or in July but show a 66% chance of a rate cut in November.
The market will be closely watching the Federal Reserve’s dot plot and economic projections in the aftermath of the policy meeting. Before the Fed decision on Wednesday, investors will also be paying attention to the consumer price index reading for May. Overall, the uncertainty surrounding the Fed’s decision on interest rates is causing fluctuations in the stock market, with some names gaining ground while others are seeing losses.
Discussion about this post