After coming under pressure early in the session, stocks regained some ground over the course of the trading day on Tuesday but still closed modestly lower. The major averages all finished the day in the red, with the tech-heavy Nasdaq falling to its lowest closing level in almost a month.<\/p>\n
The major averages remained stuck in negative territory going into the close. The Dow fell 106.57 points or 0.3 percent to 34,517.73, the Nasdaq dipped 32.05 points or 0.2 percent to 13,678.19 and the S&P 500 slipped 9.58 points or 0.2 percent to 4,443.95.<\/p>\n
The weakness on Wall Street came as traders remained on edge ahead of the Federal Reserve’s monetary policy announcement on Wednesday.<\/p>\n
While the Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement and the central bank’s projections for clues about the outlook for rates.<\/p>\n
CME Group’s FedWatch Tool is currently indicating a 99.0 percent chance the Fed will leave rates unchanged this week.<\/p>\n
Meanwhile, the likelihood of another rate hike in November has seemingly decreased in recent days, with the FedWatch Tool currently indicating just a 28.8 percent chance of a quarter point rate increase.<\/p>\n
“The risks for headline inflation to heat up over the next couple of months are rising and that should complicate what the Fed does,” said Edward Moya, senior market analyst at OANDA.<\/p>\n
“Do policymakers become convinced that despite a resilient labor market, pricing pressures will continue to ease?” he added. “If core inflation shows it is struggling to continue to drop, the higher-for-longer rate regime will last a lot longer than the market is pricing in.”<\/p>\n
Negative sentiment may also have been generated in reaction to a Commerce Department report showing a sharp pullback in U.S. housing starts in the month of August.<\/p>\n
The report said housing starts plunged by 11.3 percent to an annual rate of 1.283 million in August after jumping by 2.0 percent to a revised rate of 1.447 million in July.<\/p>\n
Economists had expected housing starts to decrease to an annual rate of 1.440 million from the 1.452 million originally reported for the previous month.<\/p>\n
With the substantial pullback, housing starts tumbled to their lowest level since hitting an annual rate of 1.266 million in June 2020.<\/p>\n
“The sharp drop in Housing Starts this morning is concerning because housing has been one of the pillars of the economy<\/span> that has held up much better than expected,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. <\/p>\n He continued, “If it turns out that this is the first crack in an otherwise bulletproof consumer then it could change the narrative from an economy that is impervious to rapid interest rate hikes to one that is vulnerable and susceptible to a recession.”<\/p>\n Meanwhile, the Commerce Department said building permits surged by 6.9 percent to an annual rate of 1.543 million in August after inching up by 0.1 percent to a revised rate of 1.443 million in July.<\/p>\n Building permits, an indicator of future housing demand, were expected to rise to an annual rate of 1.445 million from the 1.442 million originally reported for the previous month.<\/p>\n With the sharp increase, building permits reached their highest level since hitting an annual rate of 1.555 million last October.<\/p>\n Sector News<\/p>\n Gold stocks showed a significant move to the downside on the day, dragging the NYSE Arca Gold Bugs Index down by 2.1 percent. The index pulled back off its best closing level in over a month.<\/p>\n The pullback by gold stocks came despite a slight increase by the price of the precious metal, with gold for December delivery inching up $0.30 to $1,953.70 an ounce.<\/p>\n Energy stocks also came under pressure over the course of the trading session amid a downturn by the price of crude oil.<\/p>\n With crude for October delivery falling $0.28 to $91.20 a barrel after reaching a high of $93.74 a barrel, the Philadelphia Oil Service Index slumped by 2.1 percent and the NYSE Arca Oil Index slid by 1.1 percent.<\/p>\n Semiconductor and retail stocks also moved notably lower on the day, while telecom stocks moved to the upside. <\/p>\n Other Markets<\/p>\n