Wall St edges lower as investors turn cautious ahead of Fed rate decision

NEW YORK: The S&P 500 and the Nasdaq eased from intraday record highs on Tuesday as caution set in ahead of an anticipated interest rate cut from the Federal Reserve on Wednesday, while declines in financial stocks weighed on the Dow.

Investors are largely pricing in a 25 basis point cut from the US central bank at the conclusion of its two-day meeting on Wednesday, to offset the deterioration in the US labor market, evidenced by numerous recent economic indicators. The S&P 500 financial and utilities sectors lost 0.7 percent and 0.9 percent respectively, leading declines among peers. An index tracking regional banks lost 1.6 percent.

Technology stocks were the biggest decliners on the benchmark index. Losses in Goldman Sachs and Travelers bogged down the Dow.

“It’ll be important how (the Fed) they shape the message of forward policy and markets are taking a wait-and-see approach ahead of one of the most important Fed meetings of the year so far,” said Anthony Saglimbene, chief market strategist at Ameriprise. “We are seeing money coming out of some of the more interest rate cyclical sectors, as there is a bit of caution ahead of tomorrow’s announcement.” At 11:47 a.m. ET, the Dow Jones Industrial Average fell 166.20 points, or 0.36 percent, to 45,718.70, the S&P 500 lost 10.90 points, or 0.16 percent, to 6,604.38 and the Nasdaq Composite lost 20.15 points, or 0.09 percent, to 22,328.60.

The CBOE Volatility Index climbed to its highest level in more than a week, and was last at 16.23 points.

Defensive sectors such as healthcare and consumer staples also saw some gains, up 0.1 percent each.

Energy stocks advanced 1.6 percent tracking higher oil prices, while gains in Tesla lifted the consumer discretionary sector.

Data on Tuesday showed that US retail sales increased more than expected in August, but did little to change already priced-in rate cut expectations - a total of about 68 basis points by end-2025 according to data compiled by LSEG showed.

Expectations remained unchanged after the US Senate confirmed economic adviser Stephen Miran to the Fed Board and an appeals court rejected President Donald Trump’s bid to fire Fed Governor Lisa Cook.

The S&P 500 and the Nasdaq closed at all-time highs on Monday after hitting intraday records in multiple sessions. The three main indexes have gained so far in September - a month deemed bad for US equities historically.

The benchmark S&P 500 has lost 1.5 percent on average in September since 2000, data compiled by LSEG showed.Webtoon Entertainment soared 31 percent after a deal with Disney to create a new digital comics platform to feature content from Disney’s portfolio, including “Marvel” and “Star Wars”.

Trump said that the US and China have a deal that will keep the short-video app TikTok operating in the US CNBC, citing sources, said Oracle will keep its TikTok cloud deal under new agreement. It gained 1 percent.

Warner Bros Discovery fell 8.8 percent. TD Cowen downgraded the media company’s rating to “hold” from “buy”.

Declining issues outnumbered advancers by a 1.7-to-1 ratio on the NYSE and by a 1.41-to-1 ratio on the Nasdaq.

The S&P 500 posted 13 new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 69 new highs and 51 new lows.