U.S. stocks slipped at the open on Tuesday as investors fixed their sights on the outcome of a meeting where the Federal Reserve is widely expected to raise interest rates for the first time this year.
The Fed meets over two days starting Tuesday, with traders pricing in a 90 percent chance of a quarter point rate hike as inflation picks up and the labor market shows solid strength.
The central bank’s statement is due at 2:00 p.m. ET on Wednesday, which will be followed by Fed Chair Janet Yellen’s press conference.
“Ahead of a major data point like the Fed, you typically don’t see big investors move sharply in one way or the other,” said Adam Sarhan, chief executive officer at 50 Park Investments in Florida.
“Investors are taking a wait-and-see approach, don’t expect any fireworks today.”
Wall Street’s top banks were unanimous on the view the Fed would raise rates at its policy meeting, a Reuters poll showed on Friday.
The next big question for the market is whether the Fed signals a more aggressive tightening path than previously expected, especially as markets are betting on a potential economic boost from President Donald Trump’s proposed fiscal policies.
Wall Street’s major indexes have been largely kept in check since the start of the month as investors prepared for higher rates following a slew of hawkish comments from top Fed officials.
The Nasdaq Composite .IXIC was down 20.37 points, or 0.35 percent, at 5,855.41.
Eight of the 11 major S&P sectors were lower, with the energy index’s .SPNY 1.37 percent loss leading the decliners.
Oil prices fell to three-month lows after OPEC reported that crude inventories in developed countries had risen above the five-year average in January despite production cuts by some of the world’s largest exporters. [O/R]
Chevron (CVX.N) fell 1.19 percent and was among the biggest drags on the Dow.
Shares of Valeant (VRX.N) plunged 10.5 percent to $10.82 after billionaire investor William Ackman said his hedge fund, Pershing Square Capital Management, sold its entire stake in the company.
Dow component Wal-Mart (WMT.N) was up 1.4 percent at $70.93.
Declining issues outnumbered advancers on the NYSE by 2,152 to 439. On the Nasdaq, 1,691 issues fell and 516 advanced.
The S&P 500 index showed five new 52-week highs and no new lows, while the Nasdaq recorded 13 new highs and 19 new lows.
(Reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Anil D’Silva & Shri Navaratnam)