NEW YORK (AP) — Stocks fell on Wall Street Tuesday ahead of several key inflation reports this week and the Federal Reserve’s latest interest rate policy decision.
The S&P 500 shed 0.1%. Roughly 70% of stocks in the benchmark index fell. The Dow Jones Industrial Average fell 205 points, or 0.5%, while the Nasdaq composite rose 0.4% as of 1:56 p.m. Eastern. The weaker trading follows another record-setting day for both the S&P 500 and the Nasdaq.
There was little corporate or economic news for investors to review. General Motors rose 1.1% after the automaker announced that its board approved a $6 billion stock buyback.
Calavo Growers jumped 6.4% after the avocado grower's latest quarterly report beat analysts' forecasts.
Banks were among the biggest weights on the market. Fifth Third Bancorp fell 1.2% after cutting its forecast for revenue growth. JPMorgan was down 2.6% and Citigroup fell 3.4%.
Apple rose 6%, helping to offset losses elsewhere in the technology sector. The company is gaining ground after highlighting its push into artificial intelligence technology. Affirm Holdings climbed 7% on news that it the buy now, pay later company will be integrated into Apple Pay.
Treasury yields fell in the bond market. The yield on the 10-year Treasury slipped to 4.42% from 4.47% late Monday.
The key events for the market this week come on Wednesday, when the U.S. releases its latest update on inflation at the consumer level and the Federal Reserve announces its latest update on interest rates. The U.S. will also release its latest update on prices at the wholesale level on Thursday.
Wall Street expects the government's consumer price index to remain unchanged at 3.4% in May. Inflation as measured by the CPI is down sharply from its peak at 9.1% in 2022, but it has seemingly stalled around 3%. That has complicated the Fed's goal of taming inflation back to its target rate of 2%.
The Fed has held its main interest rate at its highest level in more than two decades and Wall Street is currently hoping for one or two cuts to that rate this year. Virtually no one expects the Fed to move its main interest rate at its current meeting, which started Tuesday. Policymakers will be publishing their latest forecasts on Wednesday for where they see interest rates and the economy heading.
When Fed officials released their last projections in March, they indicated the typical member foresaw roughly three cuts to interest rates in 2024. That projection will almost certainly fall this time around.
“The Fed has a dentist’s mentality believing that pain now will save you suffering down the road,” said Bryce Doty, senior portfolio manager at Sit Investment Associates. “They are oblivious to how high interest rates are driving up costs for businesses that are being passed on to the consumer.”
Data on the economy have come in mixed recently, and traders are hoping for a slowdown that stops short of a recession and is just right in magnitude. A cooldown would put less upward pressure on inflation, which could encourage the Fed to cut rates. Lower interest rates could fuel more growth for the broader stock market. Major indexes have been rallying to records, though, despite worries about sticky inflation and high interest rates.
The economy has remained resilient with support from a strong jobs market and consumer spending. Consumers are becoming increasingly stressed, especially those with lower incomes, and retailers have been warning investors about the potential impact to earnings and revenue. The U.S. jobs market has been showing some signs of cooling, which could ease inflation but put more stress on consumers.
Stocks in Europe fell and stocks in Asia were mixed.
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AP writers Zimo Zhong, Matt Ott and Alex Veiga contributed to this report.
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