Wall Street witnessed a second consecutive day of losses on Tuesday, as investors remained wary of the Federal Reserve’s reluctance to implement interest rate cuts in the near future. The S&P 500 index (^GSPC) experienced a 1.2% retreat, while the Dow Jones Industrial Average (^DJI) saw a drop of approximately 330 points, or 1.0%. Simultaneously, the tech-centric Nasdaq Composite index (^IXIC) also registered a decline of 1.2%. Despite commencing the week with gains, all three major stock benchmarks are now poised for a downturn this month.
Federal Reserve policymaker Neel Kashkari conveyed on Monday that, given the unforeseen resilience of the US economy, the central bank is likely to raise interest rates and maintain them at elevated levels to curb inflation. The anticipation of “higher for longer” interest rates weighed heavily on the markets. The 10-year Treasury yield (^TNX) lingered near levels not seen since 2007, consequently propelling the dollar to a fresh 10-month high. Additionally, a somber assessment from Moody’s warned that a government shutdown could inflict damage on the US credit rating. With just days remaining before the September 30 deadline for a budget agreement, historical precedent suggests that such a standoff has the potential to unsettle the stock market.
Despite the prevailing apprehensions, this week’s economic and business data provided some relief. Thursday is slated to feature an update on US second-quarter GDP, with Friday presenting a new assessment of PCE inflation, the Federal Reserve’s preferred metric.
In summary, the S&P 500 (^GSPC) fell by 1.2%, the Dow Jones (^DJI) dropped about 330 points (1.0%), and the Nasdaq Composite (^IXIC) also declined by 1.2%. As the trading session drew to a close, the three principal stock indices retreated further from the record peaks attained in August. Investors are closely monitoring developments concerning both the Federal Reserve’s policy decisions and the ongoing negotiations surrounding the US government budget.
Source: Yahoo Finance
