US stocks drop record high before Federal Reserve decides interest rates | Business

New York – U.S. stocks on Tuesday hit an all-time high as they wait for investors to ask if the Federal Reserve will give any clues on when to relinquish large-scale support for the market. It fell from.

The S&P 500 fell 8.56 (0.2%) to 4,246.59 as the Federal Reserve Board of Governors launched a two-day meeting on interest rate policy. The day before, the index returned to record levels amid optimism that the Fed’s ultra-low interest rates, the COVID-19 vaccination and government financial support are revitalizing the economy.

The Dow Jones Industrial Average lost 94.42 points (0.3%) to 34,299.33. The Nasdaq Composite was 101.29, down 0.7% from its own high of 14,072.86.

The S&P 500 fell 0.4% earlier in the day after the report was released. Wholesale inflation surged last month More than economists expected. Producer prices in May were 6.6% higher than a year ago, the highest on record since 2010, the latest evidence that inflation is skyrocketing in the economy.

Worries could force the Fed to withdraw $ 120 billion in monthly bond purchases that promise to keep mortgages low, keep long-term interest rates low, and raise interest rates in the short term if higher inflation sets in. There is their lowest record.

The Federal Reserve has said that until now it viewed the rise in inflation as temporary. Latest pricing policy decisions Wednesday afternoon.

“From a price point of view, there is always a jury to know when and how much inflationary pressures will be observed, or if this new normal peak will set in,” said founder Greg Basque. I do not have. »CEO of AXS Investments.

Most economists expect the Fed to say again on Wednesday that the rise in inflation is temporary and can stabilize market support. But they also say that Wednesday afternoon could provide the first sign the Fed is considering when to start delaying bond purchases.

Many investors agree with the Fed’s view that inflation will not last as long and is the expected outcome of an economy that has escaped the pandemic blockade. According to BofA Global Research, a survey of fund managers found that 72% said inflation was only “temporary”. That’s what the majority say, with future declines in stock prices likely to be less than 10%.

A peaceful decline in bond purchases could allow prices to stay high across the market as a whole, even under criticism that they are too expensive, in contrast to the pain that results from the rapid freeze on federal support. there is.

There are few signs that inflation could slow in parts of the economy. Wood and copper prices have fallen from their highs a few weeks ago. Copper fell 4.3% on Tuesday, and miner Freeport-McMoran’s share price fell 4.8%.

Other reports on the economy on Tuesday described a complex situation. May retail sales fell 1.3% From April, after rising 0.9% the previous month, it collapsed, much more than economists had expected.

This was likely due in part to the effect of declining relief money sent by the US government to households earlier this year, increasing spending in March and April. But economists may be a sign that as the economy recovers, Americans are shifting their spending more toward travel, restaurants, and other services, less likely to go to what they buy in stores. detail. Mentionned.

According to another report Mining industry production Last month, economists nationwide rose more than expected.

One of the biggest hurdles on the S&P 500 was tech stocks, although most stocks in the index rose.

Energy companies remained strong as crude oil prices soared. ExxonMobil advanced 3.6% and Chevron 2.2%.

Bond yields were relatively stable. Yields on 10-year Treasury bills fell from 1.50% at the end of Monday to 1.49%.

Earlier today, the European stock market closed slightly higher. Asian markets are mixed, with the Japanese Nikkei 225 up 1% and Shanghai stocks down 0.9%.

US stocks drop record high before Federal Reserve decides interest rates | Business

US stocks drop record high before Federal Reserve decides interest rates | Business

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