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In a significant downturn, U.S. stocks are seeing declines as investors prepare for the much-anticipated Federal Reserve policy meeting.
US Stocks in the Red
At 11:12 ET (15:12 GMT), the Dow Jones Industrial Average witnessed a 0.7% drop, equivalent to 248 points. Simultaneously, the S&P 500 also dipped by 0.7%, while the NASDAQ Composite suffered an 0.8% decline.
The U.S. Federal Reserve commences its latest two-day meeting, with expectations leaning towards maintaining interest rates within the 5.25% to 5.50% range.
Uncertainty Prevails
Despite this, uncertainties loom regarding the central bank’s plans for the remainder of the year. Recent data showcased the largest spike in headline consumer prices in 14 months, coupled with core prices slowing to their lowest rate in nearly two years.
Investors eagerly await Fed Chair Jerome Powell’s insights during Wednesday’s press conference, where he may provide context about the Fed’s stance for the upcoming fall.
Economic Projections in Focus
Additionally, the Fed will unveil its latest economic projections, with a keen eye on the year-end inflation forecast, offering potential hints about decisions at the November and December policy meetings.
Shifting gears to economic data, the real estate sector reports August housing starts at 1.28 million, slightly below expectations, while building permits surpassed forecasts at 1.54 million, compared to an expected 1.44 million.
Upward Revision
U.S. economic indicators of late suggest a robust economy, prompting the Organization for Economic Co-operation and Development to revise its U.S. growth forecast upward. Now, it anticipates a 2.2% growth rate this year, as opposed to the 1.6% forecasted in June. Growth is expected to slow to 1.3% next year, still surpassing the 1.0% estimate for 2024 made in June.
In the corporate sphere, AutoZone (NYSE: AZO) prepares to release its earnings, while Instacart readies itself for Nasdaq trading following its initial public offering, priced at the upper end of the revised target range.
Auto Sector Tensions
The automotive sector faces potential disruptions, with the United Auto Workers union issuing warnings of potential strikes if negotiations with industry giants Ford (NYSE: F), General Motors (NYSE: GM), and Stellantis (NYSE: STLA) stall.
Rocket Lab USA, Inc. (NASDAQ: RKLB) experiences a 7.8% drop in early trading due to its first launch failure in two years.
Oil prices maintain their upward trajectory for the fourth consecutive session. The Energy Information Administration reports a third consecutive monthly decline in US stocks oil output from major shale-producing regions, reaching its lowest level since May 2023.
Supply Concerns Persist
This development adds to concerns of a substantial supply deficit this year, stemming from extended production cuts by Saudi Arabia and Russia.
The American Petroleum Institute is set to release its U.S. oil stockpile forecast later, offering a preview of Wednesday’s official report.
Disclaimer: Please note that this article serves solely for informational purposes and should not be construed as financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions
