4:15pm: Fed's long-term outlook could be more insightful than its rate decision
The Dow closed Tuesday down 107 points, 0.3%, at 34,518, the Nasdaq Composite slid 32 points, 0.2%, to 13,678 and the S&P 500 slipped 10 points, 0.2%, to 4,444. The small-cap Russell 2000 index declined 7 points, 0.4%, to 1,828.
Disney shares fell 3.6% after the company announced plans to double its theme park investment over the next 10 years to $60 billion.
Investors are looking ahead to the Federal Reserve's decision on interest rates following the conclusion of its two-day meeting on Wednesday. Most experts don't expect rates to go up again, but the future economic projections the Fed provides could significantly influence investor sentiment.
“Now … that we’re face to face with the Fed meeting, markets are just taking a little breather and waiting to see what they say to take their next cue,” said Chris Fasciano, portfolio manager at Commonwealth Financial Network.
“We know that we’re closer to the end of the hiking cycle than the beginning,” said Kevin Gordon, senior investment strategist at Charles Schwab (NYSE:SCHW). “How they’re viewing the next year out, or at least turning the corner in 2024, is much more important.”
12:00pm: Rising oil price increases inflation jitters as Fed meeting kicks off
US stocks fell sharply as the Fed's two-day meeting got underway against a backdrop of rising oil prices adding to nerves that the battle against inflation is far from being won.
At midday, the Dow Jones Industrial Average was down 256.72 points, 0.7%, at 34,367.58, the S&P 500 was down 27.70 points, 0.6%, at 4,425.83 and the Nasdaq Composite was down 100.13 points, 0.7%, at 13,610.11.
Axel Rudolph, senior market analyst at online trading platform IG said: "The rising oil price, which has so far risen by more than 16% in less than a month, creates concerns that rates might have to remain higher for longer."
"US bond yields have shot up to levels last seen in September 2007 while the US dollar slips for a fourth straight session and stocks for a second day."
The soike in the oil price has come ahead of the interest rate decision by the Federal Reserve tomorrow.
While rates are expected to remain unchanged on Wednesday the rising prices will add to inflationary worries which could increase pressure on the central bank to act in November.
9:41am: Stocks ease ahead of interest rate decision
US stocks slipped across the board as investors prefer to stay sidelined ahead of the interest rate decision by the Federal Reserve on Wednesday.
Shortly after the opening bell, the Dow Jones Industrial Average was down 66.02 points, 0.2% at 34,558.28, the S&P 500 was down 9.34 points, 0.2%, at 4,444.19 and the Nasdaq Composite was down 46.62 points, 0.3%, at 13,663.62.
The two-day Fed meeting starts later in the day, with the central bank expected to hold benchmark interest rate at the current 5.25%-5.50% range on Wednesday.
Fawad Razaqzada, market analyst at City Index and Forex.com said: "Although no policy changes are anticipated at this FOMC meeting, traders will closely examine hints regarding the next meeting."
He suggested paying close attention to the policy statement, the latest dot plots, and Fed Chair Jerome Powell's remarks during the FOMC press conference.
"The Fed might signal the likelihood of an additional hike this year, thanks to a slower disinflation process bolstered by a robust US consumer and increased inflation expectations. The FOMC may also revise the 2024 median plot to indicate fewer rate cuts than previously projected," he said.
US housing starts declined in August, driven by multi-family construction, while building permits rose, according to figures from the Commerce Department.
Housing starts fell 11.3% in the year to August to a seasonally adjusted annual rate of 1.283 million, much worse than the expected 1.5% decrease to 1.43 million.
The decrease was driven by multi-family projects, which fell 26.3% on month. Single-family projects fell 4.3% from the prior month.
July's housing starts were downwardly revised to 1.447 million from 1.452 million initially estimated.
7:00am: Stocks to edge higher as FOMC meeting kicks off
US futures pushed higher ahead of the open on Wall Street, after a sluggish session on Monday, as investors await the Federal Reserve’s interest rate decision and guidance on the future path of monetary policy.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were up 0.2%.
Kit Juckes at Societe Generale said: “The market doesn’t expect a Fed hike but the dot-plot, which currently suggests there will be one more this year before a steady fall, thereafter, could see cuts pushed further out, while the tone of the statement is certain to be hawkish, as the FOMC reinforces the ‘higher for longer’ message.”
Shares of online grocery delivery company Instacart will begin trading, five days after Arm’s blockbuster debut signalled a warming market for new US listings.
The shares will list at $30, the top end of the range it gave investors last week.
Elsewhere, figures are expected to show construction on new US residences is expected to have ticked down to 1.44 million in August from 1.45 million in July.