Stocks dip as markets await Fed rate
NEW YORK — Most stocks on Wall Street dipped Tuesday in their first trading after tumbling into a bear market on worries that high inflation will push central banks to clamp the brakes too hard on the economy.
The S&P 500 fell 14.15, or 0.4%, to 3,735.48 as investors braced for the Federal Reserve’s announcement on Wednesday about how sharply it will raise interest rates. It wobbled between losses and gains through the day after a couple of big companies flexed financial strength with stronger profits and payouts to shareholders.
Despite the swings, trading across markets was still calmer than during Monday’s worldwide rout, which sent the S&P 500 down 3.9%.
“No one’s going to take meaningful positions today ahead of what could be a riproaring day” with the Fed’s announcement, said Katie Nixon, chief investment officer for Northern Trust Wealth Management.
Cryptocurrency prices continued to
swing. They’ve been among the hardest-hit in this year’s sell-off for markets as the Federal Reserve and other central banks raise interest rates to rein in inflation and forcefully turn off the “easy mode” that helped prop up markets for years. Bitcoin was down nearly 5% in afternoon trading and sitting at $22,201, according to CoinDesk. It earlier fell to nearly 70% below its record of $68,990.90 set late last year.
Offering some support to the market was a report that showed inflation at the wholesale level was a touch lower in May than expected, though it remains very high. It could be an indication that wholesale inflation peaked in March, according to Jack Ablin, chief investment officer at Cresset Capital Management.
But economists said the data won’t keep the Federal Reserve from raising its key interest rate on Wednesday by a larger-thanusual amount. Investors are now mostly expecting the biggest increase since 1994, a hike of three-quarters of a percentage point, or triple the usual amount.
A week ago, such a mega-increase was seen as only a remote possibility, if one at all. But a market-bludgeoning report Friday on inflation at the consumer level has seemingly pinned the Fed into getting more aggressive. It showed inflation for the consumer price index got worse in May, instead of slowing as hoped.