NEW YORK, Sept 18 – US stocks were flat on Tuesday, as the market awaited the Federal Reserve’s key interest rate cut decision.
The Dow Jones Industrial Average fell 15.90 points, or 0.04 per cent, to 41,606.18. The S&P 500 added 1.49 points, or 0.03 per cent, to 5,634.58, while the Nasdaq Composite Index increased 35.93 points, or 0.20 per cent, to 17,628.06.
Six of the 11 primary S&P 500 sectors ended in green, with energy and consumer discretionary leading the gainers by going up 1.41 per cent and 0.62 per cent, respectively. Meanwhile, health and consumer staples led the laggards by dropping 1.01 per cent and 0.93 per cent, respectively.
Wall Street is poised for the Fed’s long-awaited interest rate cut scheduled for Wednesday afternoon, a decision that could enhance earnings growth for companies amid high borrowing costs and elevated inflation. The Fed initiated its aggressive rate increase campaign in March 2022.
Recent US retail sales figures have suggested a healthy consumer environment. Retail sales in August increased by 0.1 per cent, contrary to economists’ predictions of a 0.2 per cent drop, as reported by Dow Jones. When excluding automobiles, the increase also registered at 0.1 per cent, just falling short of the anticipated 0.2 per cent rise.
While investors are looking forward to the rate cut on Wednesday, opinions remain mixed regarding the magnitude of the potential decrease.
Traders are currently factoring in a 63 per cent likelihood that the central bank will lower rates by 50 basis points, according to CME Group’s FedWatch tool. This mark has risen from approximately 47 per cent on Friday, but is slightly below the 67 per cent forecasted earlier on Tuesday.
According to Sonu Varghese, global macro strategist at Carson Group, the Fed will more than likely exercise a 50-basis-point rate cut on Wednesday.
“Markets currently expect a 50 basis points cut by the Fed at their September meeting, and it’s very unlikely the Fed will surprise investors by going 25 basis points,” he wrote.
