Traders work on the floor of the New York Stock Exchange on September 4, 2024.
Brendan McDiarmid | Reuters
of S&P 500 Stocks fell after hitting record highs on Tuesday as markets awaited the Federal Reserve’s decision to cut key interest rates.
The composite index fell 0.1% to 5,627 after hitting a record high of 5,670.81. Nasdaq Composite Index Up 0.1%, Dow Jones Industrial Average The index fell 40 points, or 0.1%, as the 30 stocks in the Dow Jones Industrial Average also hit new all-time highs.
S&P 500 in 2024
The S&P 500’s rise to an all-time high early in the session came during a historically tough period for the market, after September was the index’s worst month in the past decade, with a monthly average decline of 1.3%, according to FactSet data.
Traders also weathered late-summer headwinds stemming from concerns about the health of the U.S. economy. Disappointing August employment and manufacturing data led to a major one-day sell-off, but more constructive data releases and hopes of a Fed rate cut allowed stocks to rebound.
Wall Street is bracing for a long-awaited interest rate cut from the Federal Reserve, scheduled for Wednesday afternoon, that could help boost corporate earnings growth amid rising borrowing costs and soaring inflation after the central bank embarked on its first aggressive interest rate hike campaign in March 2022.
The latest retail sales data shows consumers are doing well. According to Dow Jones, retail sales rose 0.1% in August, while economists had expected a 0.2% decline. Excluding autos, the figure also rose 0.1%, slightly below the consensus estimate of 0.2%.
Investors are expecting a rate cut on Wednesday, but the market is divided on how big the cut should be. Traders now see a 59% chance that the central bank will cut rates by 50 basis points, according to CME Group’s Fed Watch tool, up from about 47% on Friday but down slightly from the 67% expected on Tuesday. One basis point is equal to 0.01%.
A deeper rate cut could raise concerns about the health of the economy, some investors say.
“A 50-basis-point cut would likely mean another downward revision in the Fed’s view of the labor market, which is a more worrying sign,” said Adam Turnquist, chief technical strategist at LPL Financial Inc. “I think there’s a pretty big disconnect between what the market is expecting and what the Fed is expecting.”
Intel The stock rose 4% after the company announced plans to turn its foundry business into a subsidiary. The Biden administration also granted the company up to $3 billion in financial aid through the Semiconductor Act.
