Stocks moved mostly lower early in the session on Tuesday and are seeing continued weakness in afternoon trading. The major averages have all moved to the downside on the day, more than offsetting the slim gains posted on Monday.<\/p>\n
Currently, the major averages are off their worst levels of the day but still firmly in negative. The Dow is down 240.65 points or 0.7 percent at 34,383.65, the Nasdaq is down 78.38 points or 0.6 percent at 13,631.85 and the S&P 500 is down 26.00 points or 0.6 percent at 4,427.53.<\/p>\n
The weakness on Wall Street comes as traders remain 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 decreases in recent days, with the FedWatch Tool currently indicating just a 28.8 percent chance of 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 Energy stocks have come under pressure over the course of the session, as the price of crude oil has pulled back near the unchanged line after an early surge. Crude for October delivery is currently up just $0.13 at $91.61 a barrel after reaching a high of $93.74 a barrel.<\/p>\n Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 2.3 percent and the NYSE Arca Oil Index is down by 1.5 percent.<\/p>\n Considerable weakness also remains visible among gold stocks, as reflected by the 2.1 percent slump by the NYSE Arca Gold Bugs Index. The index is pulling back off its best closing level in over a month.<\/p>\n The pullback by gold stocks comes amid a slight decrease by the price of the precious metal, with gold for December delivery edging down $0.90 to $1,952.50 an ounce.<\/p>\n Retail, transportation and semiconductor stocks also continue to see notable weakness in afternoon, while telecom stocks continue to buck the downtrend.<\/p>\n Other Markets<\/p>\n