On Tuesday, the Dow Jones Industrial Average and the S&P 500 both closed with minimal changes, as the Federal Reserve commenced its critical two-day monetary policy meeting. The S&P 500 and the Dow finished the day at 5,634.6 and 41,606.2, respectively, while the tech-heavy Nasdaq Composite saw a slight gain of 0.2%, closing at 17,628.1.
It is noteworthy that just the day before, the Dow had reached an all-time high. In sector performance, energy emerged as the leader among gainers, while healthcare experienced the sharpest decline. Current sentiments suggest that there is a 63% probability that the Federal Reserve's monetary policy committee will decide to lower its benchmark lending rate by 50 basis points, with the remaining odds favoring a more modest 25-basis-point reduction, as per the CME FedWatch tool. "The committee is likely to maintain a base case of 25-basis-point cuts beginning this week, with a consideration but not a commitment to action at every subsequent meeting," Stifel stated in a note to clients on Tuesday. In terms of yields, the US two-year yield edged up by 4.8 basis points to 3.60%, while the 10-year rate saw a rise of 2.5 basis points, reaching 3.65%.
Amidst these monetary considerations, the economic landscape remains optimistic. Recent data from the Census Bureau indicated that US retail sales in August showed an increase, defying Wall Street's expectations of a decline. However, this growth came with a note of caution, as the pace of growth has slowed, particularly due to drops in gasoline station and motor vehicle sales. BMO Capital Markets expressed in a client note that, "Based on the health of consumer spending alone, the Fed would have little reason for an aggressive start to the easing cycle, and we continue to lean toward a smaller move." In another report, Morgan Stanley conveyed expectations that the Fed would implement interest rate cuts in a series of 25-basis-point reductions, affirming that the continued strength of consumer spending is a crucial factor. In the housing sector, US homebuilder confidence saw its first improvement in September after a five-month decline, attributed to falling mortgage rates.
This data was gathered from the National Association of Home Builders and Wells Fargo. On the commodities front, West Texas Intermediate crude oil experienced an uptick of 1.6%, trading at $71.19 per barrel by Tuesday's close. In corporate news, shares of Moderna ($MRNA) surged by 4.1%, making it the top performer on the Nasdaq and among the leading stocks on the S&P 500.
The biotechnology firm announced that it had received Health Canada’s approval for its updated Spikevax COVID-19 vaccine, which is designed to target the KP.2 sub-lineage of SARS-CoV-2 for individuals aged six months and older. Intel ($INTC) also featured as the top performer in the Dow and among the Nasdaq leaders, with an increase of 2.7%.
On Monday, Intel disclosed intentions to transform its manufacturing arm into an independent subsidiary while expanding its collaboration with Amazon.com’s ($AMZN) cloud computing division to produce customized artificial intelligence chips. Amazon’s shares concluded the day with a 1.1% rise. Conversely, Accenture ($ACN) saw its shares tumble by 4.8%, marking the steepest decline on the S&P 500.
Reports from Bloomberg News revealed the firm is postponing most staff promotions until June, citing anonymous sources. Additionally, Accenture confirmed its investment in technology company Martian. In precious metals, gold dipped by 0.5%, trading at $2,596.40 per troy ounce, while silver experienced a 0.3% decrease, settling at $31.05 per ounce..