“After such a fierce race in recent weeks, the stock market has been waiting for a correction or at least a break for a long time,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “The upward price dynamics were becoming extreme and the sentiment indicators a little too bullish. Profit-taking has gained today, especially in economically sensitive areas that have done best in recent weeks. “
The Nasdaq Composite was the best performing, closing at a record level, while investors fell back on the darlings of technology. The index jumped 0.3% on Tuesday.
Big gains in Facebook, Amazon Apple, Netflix and Alphabet, parent of Google, pushed the technology-intensive Nasdaq Composite above the 10,000 threshold for the first time; however, it closed below this level.
“The overweight in stocks most sensitive to an economic recovery has worked well in recent weeks, but not earlier in the year and not today,” added Paulsen. “Alternatively, holding high-growth new-era stocks worked well earlier in the year and performed very well today, but not in the past two weeks. ”
The Federal Open Market Committee began its two-day meeting Tuesday, with markets monitoring the news on several fronts.
The central bank is unlikely to make any major policy changes, with its benchmark rate close to zero and asset purchase programs continuing. However, investors will watch reflections on the possible implementation of yield limits and the strengthening of long-term forecasts over the period during which the Fed will maintain current policies in place.
The meeting ends Wednesday with the release of a policy statement and quarterly summary of economic projections, followed by President Jerome Powell’s press conference at 2:30 p.m. EST.
The Fed will release its first forecast for the economy and interest rates since the end of last year, as it skipped a forecast in March as the pandemic forced the economy to shut down sharply.
– with a report by Jeff Cox from CNBC.
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