Major U.S. Stock Indexes Close Mixed Ahead Of Fed Announcement

After ending the previous session firmly positive, the major U.S. stock indexes turned in a mixed performance during trading on Tuesday. While the tech-heavy Nasdaq edged higher, the Dow and the S&P 500 pulled back off yesterday’s record closing highs.

The Nasdaq gave back ground after jumping as much as 1.2 percent but still ended the day up 11.86 points or 0.1 percent at 13,471.57. Meanwhile, the Dow fell 127.51 points or 0.4 percent to 32,825.95 and the S&P 500 dipped 6.23 points or 0.2 percent to 3,962.71.

The mixed close on Wall Street came as traders looked ahead to the Federal Reserve’s monetary policy announcement on Wednesday.

Traders will be paying close attention to any changes to the Fed’s statement as well as any revisions to the central bank’s forecasts for the economy, inflation and interest rates.

Some traders are also hoping Fed Chair Jerome Powell will address the recent spike in treasury yields in his post-meeting press conference.

Ahead of the Fed announcement, treasury yields saw considerable volatility on the day before closing modestly higher.

With the Fed in focus, traders largely shrugged off a batch of disappointing U.S. economic data, including a Commerce Department report showing retail sales pulled back by much more than anticipated in the month of February.

The Commerce Department said retail sales plunged by 3.0 percent in February after soaring by an upwardly revised 7.6 percent in January.

Economists had expected retail sales to dip by 0.5 percent compared to the 5.3 percent spike originally reported for the previous month.

Excluding a drop in auto sales, retail sales still tumbled by 2.7 percent in February after skyrocketing by 8.3 percent in January. Ex-auto sales were expected to edge down by 0.1 percent.

The Federal Reserve also released a report showing an unexpected slump in U.S. industrial production in February, with steep drops in manufacturing and mining output more than offsetting a sharp increase in utilities output.

The Fed said industrial production tumbled by 2.2 percent in February after jumping by an upwardly revised 1.1 percent in January.

The pullback surprised economists, who had expected industrial production to climb by 0.6 percent compared to the 0.9 percent increase originally reported for the previous month.

The Fed said the severe winter weather in the south central region of the country in mid-February accounted for the bulk of the declines in output for the month.

Sector News

Energy stocks turned in some of the market’s worst performances on the day, moving lower along with the price of crude oil. Crude for April delivery slid $0.59 to $64.80 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 4 percent and the NYSE Arca Oil Index tumbled by 2.8 percent.

Profit taking also contributed to considerable weakness among airline stocks, resulting in a 3.5 percent nosedive by the NYSE Arca Airline Index. The index ended Monday’s trading at its best closing level in almost three years.

Financial stocks also saw notable weakness on the day, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index falling by 1.5 percent and 1.3 percent, respectively.

On the other hand, semiconductor stocks extended yesterday’s rally, with the Philadelphia Semiconductor Index advancing by 1.3 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.5 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index edged up by 0.3 percent, the German DAX Index and the U.K.’s FTSE 100 Index climbed by 0.7 percent and 0.8 percent, respectively.

In the bond market, treasuries showed a lack of direction over the course of the session before closing modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.4 basis points to 1.621 percent.

Looking Ahead

The Fed’s monetary policy announcement is likely to be in the spotlight on Wednesday along with Fed Chair Powell’s post-meeting press conference.

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