Wall Street backs down after rally; Focus on the Fed meeting

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(Reuters) – US stocks fell on Tuesday as investors stopped before a Federal Reserve meeting that could offer views on recent signs of economic recovery that have pushed the tech-intensive Nasdaq to a level record in the previous session.

FILE PHOTO: Traders wearing masks work, the first day of in-person trading since the closure during the onset of coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, USA, May 26, 2020. REUTERS / Brendan McDermid

The S&P 1500 airline index fell 8.5%, while cruise operators Carnival Corp and Norwegian Cruise Line Holdings Ltd fell 10% to 12% after climbing Monday.

The Nasdaq became the first of the major Wall Street indices to confirm that it entered a bull market two and a half months earlier, as a rally in US stocks accelerated last week after data from Surprisingly optimistic jobs in May that strengthened the worst economic fallout from the pandemic were over.

The S&P 500 benchmark is about 5% below its own historic record, having climbed nearly 46% from its lowest pandemic level on March 23.

“Because the S&P 500 has risen so far, so quickly, you can always expect short episodes of profit taking along the way,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“The markets could change depending on the economic situation in a year from, say, six months.”

Although no major political announcement is expected when the US central bank closes its two-day meeting on Wednesday, investors will look for clues that the US central bank believes the worst part of the coronavirus crisis has passed.

The benchmark yield curve for the United States – an indicator of economic growth – widened to its steepest level since March as US data improved. Investors will also monitor whether the Fed will intervene to flatten the yield curve.

At 9:52 am ET, the Dow Jones Industrial Average was down 362.63 points, or 1.32%, to 27,209.81, the S&P 500 was down 33.47 points, or 1.04%, to 3,198.92. The Nasdaq Composite fell 32.98 points, or 0.33%, to 9,891.77.

The 11 S&P sectors were in the red, financials weighing the most.

On a positive note, Macy’s Inc. jumped 4% after the department store chain said its 450 reopened stores were operating better than expected.

Tiffany & Co edged up 2.3% as the luxury jeweler said it had changed some of its debt agreements to have enough cash to weather the virus epidemic when it fell 43 % of its quarterly sales.

Falling emissions outnumbered the advancers by a ratio of 5.30 to 1 on the NYSE and a ratio of 2.87 to 1 on the Nasdaq.

The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 21 new highs and no new lows.

Report from Medha Singh and Devik Jain in Bengaluru; Editing by Uttaresh.V and Shounak Dasgupta

Our standards:Principles of the Thomson Reuters Trust.

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