Wall St muted as recent economic data brings Fed’s next move into focus

NEW YORK: Wall Street was subdued on Tuesday as investors watched for signs of escalation in US trade restrictions and awaited minutes of the central bank’s January meeting to gauge its policy stance following last week’s mixed economic data.

The US Federal Reserve held interest rates steady in its January meeting and the minutes are expected on Wednesday.

Fed Governor Christopher Waller said on Monday that his “baseline” view was that US President Donald Trump’s new trade tariffs would have only a modest impact on prices, while Philadelphia Fed President Patrick Harker supported a steady interest-rate policy stance for now.

San Francisco Fed President Mary Daly also backed the case for restrictive monetary policy on Tuesday.

Hawkish commentary from Fed Chair Jerome Powell last week along with a batch of mixed data, including weaker-than-expected retail sales that caused a retreat in Treasury yields, has led to uncertainty over what the Fed’s strategy will be vis-à-vis borrowing costs this year.

Traders currently see at least one 25-basis-point rate cut and a 54% chance of an additional lowering by December, according to LSEG data.

All three indexes had clocked weekly gains in a choppy period for global markets last week as Trump’s imposition of tariffs on steel and aluminum imports, along with his plans for reciprocal tariffs, sparked volatility.

“The potential economic growth impact from tariffs as proposed appears notable, but such announcements are likely the starting point for negotiations rather than the final resting point afterward, reducing the likelihood they will knock the US off its expansion path,” analysts at Glenmede said.

Meanwhile, global risk-taking received a boost from speculation around a potential peace deal between Russia and Ukraine, as Russian and US officials met for bilateral talks in Saudi Arabia on Tuesday.

At 11:29 a.m. ET, the Dow Jones Industrial Average fell 89.94 points, or 0.20%, to 44,456.14, the S&P 500 gained 4.85 points, or 0.08%, to 6,119.48, and the Nasdaq Composite gained 4.87 points, or 0.02%, to 20,032.38.

Seven of the S&P 500’s 11 sectors traded higher, with energy adding nearly 1%, while communication services languished with a more than 1% decline.

A 3.1% drop in UnitedHealth weighed on the blue-chip Dow.

Retail giant Walmart’s earnings, a bellwether for how the American consumer is faring, are due later this week.

Megacap and growth stocks were mixed, with Nvidia leading gains as it rose 1.7%, while Meta Platforms dropped 2.4%, on pace to snap a 20-day winning streak if losses hold.

Intel gained 9.5% after a report over the weekend said rivals Taiwan Semiconductor Manufacturing Co and Broadcom was each eyeing potential deals that could break the chipmaking icon in two.

Constellation Brands added 5% after Warren Buffett’s Berkshire Hathaway disclosed a new investment in the alcoholic beverages producer on Friday.

Advancing issues outnumbered decliners by a 1.5-to-1 ratio on the NYSE, and by a 1.27-to-1 ratio on the Nasdaq.

The S&P 500 posted 23 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 109 new highs and 68 new lows.