On Tuesday, the financial landscape witnessed minimal fluctuations in the Dow Jones Industrial Average and the S&P 500, while a notable uptick was observed in the Nasdaq Composite as the Federal Reserve commenced its two-day monetary policy meeting. A crucial decision regarding interest rates is anticipated on Wednesday. The technology-oriented Nasdaq recorded a 0.2% increase, landing at 17,628.1.
In contrast, the S&P 500 and Dow concluded the trading day at 5,634.6 and 41,606.2, respectively. Notably, the Dow previously set a new all-time high on Monday. Leading the sectors in gains was energy, whereas health care faced the most significant downturn. Currently, market analysts gauge a 65% probability that the Federal Reserve's monetary policy committee will implement a reduction in its benchmark lending rate by 50 basis points, leaving the remaining likelihood favoring a 25-basis-point cut, as reflected by the CME FedWatch tool. "The committee is likely to uphold a base case of 25-basis point cuts commencing this week, while considering, albeit not committing to, action at each subsequent meeting," remarked Stifel in a recent client note. In the bond market, the US two-year yield climbed by 4.1 basis points to 3.6%, while the 10-year yield increased by 2.3 basis points, reaching 3.64%. Moving to economic indicators, recent data revealed that US retail sales in August unexpectedly rose, against Wall Street's predictions of a decline.
However, the pace of growth exhibited a slowdown, primarily influenced by decreased sales in gas stations and motor vehicles, as reported by the Census Bureau. "Considering the current state of consumer spending alone, the Fed has little justification for an aggressive initiation of the easing cycle, and our inclination persists towards a more measured approach," conveyed BMO Capital Markets in a note directed to their clients. In a separate analysis, Morgan Stanley forecasted that the Federal Reserve would opt for a series of 25-basis-point cuts in interest rates, reinforcing the notion that consumer spending remains resilient as corroborated by the retail sales report. In the housing sector, confidence among US homebuilders saw a positive trend in September for the first time in five months, attributed to the decline in mortgage rates, as indicated by the National Association of Home Builders along with Wells Fargo data. "Owing to lower interest rates, builders are now optimistic regarding future new home sales, marking a turnaround for the first time since May," stated NAHB Chairman Carl Harris. Meanwhile, crude oil prices for West Texas Intermediate surged by 1.8%, reaching $71.35 per barrel on Tuesday. In corporate news, shares of Accenture ($ACN) experienced a drop of 4.8%, marking the steepest decline within the S&P 500.
Reports surfaced indicating that the firm is deferring the majority of promotions until June, according to Bloomberg News, which cited unnamed sources. Furthermore, Accenture announced its investment in the technology company Martian. Moderna ($MRNA) emerged as the standout performer on the Nasdaq, witnessing a 4.1% increase.
The biotechnology firm disclosed that it received approval from Health Canada for its updated Spikevax COVID-19 vaccine, aimed at individuals aged six months and older. Intel ($INTC) also saw its shares appreciate by 2.7%, positioning it as the top performer in the Dow and among the best in the Nasdaq.
Late on Monday, Intel revealed its intention to transform its manufacturing operations into an independent subsidiary while expanding its collaboration with Amazon.com's ($AMZN) cloud computing sector to develop customized artificial intelligence chips. As a consequence, Amazon's stock price closed 1.1% higher on Tuesday. In precious metals, gold witnessed a decline of 0.5%, settling at $2,595.60 per troy ounce, while silver dipped by 0.4%, priced at $31.01 per ounce..