U.S. Stocks Brace for Fed Decision

The Dow and broader U.S. stock market traded mixed-to-lower on Tuesday, as investors sifted through the latest batches of economic data ahead of a pivotal policy decision by the Federal Reserve.

S&P 500, Nasdaq Fall

Wall Street’s major indexes struggled for direction amid a flurry of speculation tied to monetary policy, trade and corporate earnings. The large-cap S&P 500 Index settled down 0.3% at 3,013.18 with six of 11 sectors reporting losses. Utilities was the biggest laggard, falling nearly 1%. Information technology, consumer discretionary and communication services companies also declined sharply.

On the opposite side of the ledger, energy and materials stocks put up healthy gains.

The Dow Jones Industrial Average was off by as much as 152 points before paring losses in afternoon trading. The industrial blue-chip index settled down 23.33 points, or 0.1%, at 27,198.02.

Meanwhile, the technology-focused Nasdaq Composite Index fell 0.2% to 8,273.61.

Trump Unleashes New Trade Tirade

Equity markets came under pressure early on Tuesday after President Trump lashed out against China for trying to “rip off the USA…”

In an early-morning tweetstorm, Trump reminded his followers that “China is doing very badly, worst year in 27,” referring to the slowdown in GDP growth it experienced in the first quarter.

“My team is negotiating with them now, but they always change the deal in the end to their benefit,” he said. “They should probably wait out our Election to see if we get one of the Democrat stiffs like Sleepy Joe. Then they could make a GREAT deal, like in past 30 years, and continue… to ripoff the USA, even bigger and better than before.”

A U.S. trade delegation arrived in Shanghai this week to resume negotiations for the first time in over two months. Talks are scheduled to continue until Wednesday. No further meetings have been announced so far.

Fed Meeting Underway

The Federal Reserve began its two-day policy meeting in Washington on Tuesday against a backdrop of certainty that officials will lower interest rates upon its conclusion. For months now, Fed Fund futures prices have implied a 100% likelihood of a rate cut following the July 30-1 Federal Open Market Committee meeting.

The only debate among traders is whether the Fed will lower rates by 25 basis points or 50 basis points. In either case, a 50 basis-point reduction from current levels is expected by the time the central bank is done slashing rates this year.

In economic data, U.S. personal income from all sources rose 0.4% in June, matching forecasts, the Commerce Department reported Tuesday. Personal spending grew 0.3% during the same month, down from 0.5% in May.

The core personal consumption expenditure (PCE) index, the Federal Reserve’s preferred measure of inflation, rose 1.6% annually, up from 1.5% in May but slightly below forecasts.

Featured image courtesy of Shutterstock. Chart via Yahoo Finance. 

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi