Wall St slips before inflation data, Fed move; Apple rebounds
NEW YORK: Wall Street’s main indexes declined on Tuesday as caution dampened investor enthusiasm ahead of a crucial inflation reading and a policy announcement from the Federal Reserve expected this week.
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, June 11, 2024. – Reuters.
Shares of Apple rose one percent to hit a record high after declining in the previous session following its long-awaited AI strategy, presented at a developer conference.
However, major banks including JPMorgan Chase & Co, Citigroup and Bank of America dropped over 2 percent, sending the broader banking index down to a seven-week low. The S&P 500 and the Nasdaq posted record closing highs on Monday in a choppy session, boosted by shares of Nvidia after its 10-for-one stock split. Markets are readying for Wednesday’s release of the Consumer Price Index report for May and the conclusion of the Fed’s two-day policy meeting.
“There’s an abnormal amount of anxiety around these numbers and around the Fed meeting, particularly after the jobs report on Friday,” said Thomas Hayes, chairman at Great Hill Capital LLC. The central bank is not expected to change rates but will release its updated economic projections and “dot plot”, which shows where policymakers expect interest rates to stand over the next few years and in the longer term.
The CPI numbers and the Fed’s projections will be scrutinized closely as recent reports have sent out conflicting signals on the economy’s underlying health. “If they (Fed policymakers) take down growth a bit, then they will have cover to keep two dots on the dot plot, which would be very bullish for markets. So this trepidation you’re seeing is a fear of ‘what if that doesn’t happen’,” Hayes said. Markets are pricing in a 54.4 percent chance of the Fed’s first rate cut happening in September, according to the CME’s FedWatch tool. Rate futures also imply just one cut this year, compared to two before Friday’s bumper Nonfarm Payrolls data.
Other rate-sensitive growth stocks slipped, with Microsoft , Meta Platforms and Amazon.com falling between 0.4 percent and 0.7 percent, while Tesla dropped over 3 percent to an over one-month low. At 9.43 am ET, the Dow Jones Industrial Average was down 316.10 points, or 0.81 percent, at 38,551.94, the S&P 500 was down 20.73 points, or 0.39 percent, at 5,340.06, and the Nasdaq Composite was down 10.86 points, or 0.06 percent, at 17,181.67.
Ten of the S&P 500’s 11 sectors declined, with energy, utilities and financials all losing over 1 percent each. The small-caps Russell 2000 Index also dropped 1 percent. Prison operators CoreCivic and Target Hospitality slumped 23.2 percent and 37.1 percent, respectively, after the US Immigration and Customs Enforcement said it would close a detention center in Texas. Cryptocurrency-linked stocks slipped as bitcoin slid 3.8 percent, with bitcoin miners Riot Platforms and Marathon Digital and crypto exchange Coinbase falling between 5.7 percent and 8.8 percent. —Reuters.
