Wall Street experienced a decline on Tuesday as investors adopted a risk-off approach ahead of the U.S. Federal Reserve’s two-day monetary policy meeting. All three major indexes ended the session lower in a broad sell-off, anticipating that the Fed would leave key interest rates unchanged in its upcoming announcement. Bill Northey, senior investment director at U.S. Bank Wealth Management, highlighted the market’s intense focus on the Fed’s perspective on inflation. While inflation has made progress, Northey believes the final stretch will be more challenging to bring it back to the Fed’s target of 2%. The Fed’s Summary Economic Projections, including its dot plot, will provide insight into the committee’s forecast trajectory of interest rates, inflation, and economic growth. Michael Green, chief strategist at Simplify Asset Management, noted that the market is pricing in a pause in rate cuts but an increased risk of rates staying higher for longer. The market has a 99% probability of the Fed leaving rates unchanged on Wednesday, according to CME’s FedWatch tool. Economic factors, such as Canada’s rising inflation rate and the unexpected decline in U.S. housing starts, also contributed to investor uncertainty. In the IPO market, Maplebear Inc, the parent company of grocery delivery app Instacart, saw a 12.3% surge in its Nasdaq debut, while Arm Holdings experienced a 4.9% loss. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all ended the session in negative territory. Energy and consumer discretionary sectors suffered the largest percentage declines. Walt Disney slid after announcing its plan to double capital expenditure for its parks business over the next decade. Starbucks also lost ground following a downgrade by TD Cowen. Automakers General Motors and Ford Motor Co advanced as the United Auto Workers union threatened more strikes if progress is not made in ongoing talks. Declining issues outnumbered advancing ones on the NYSE and Nasdaq. The S&P 500 and Nasdaq Composite recorded new highs and lows. The total volume on U.S. exchanges was slightly lower than the average for the last 20 trading days.
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