Stocks closed lower on Wall Street Tuesday ahead of a key decision on interest rates by the Federal Reserve. The S&P 500 fell 43.96 points, or 1.1%, to 3,855.93. The Dow Jones Industrial Average fell 313.45 points, or 1%, to 30,706.23. The Nasdaq fell 109.97 points, or 1%, to 11,425.05. Treasury yields were mostly higher. Traders are waiting to see how high the Fed will raise interest rates at its meeting that ends Wednesday. The Fed has been raising the cost of borrowing money in hopes of slowing down the hottest inflation in four decades. Traders worry the Fed may overshoot its goal and slow down the economy so much it causes a recession.
"The market is certainly bracing for the worst and you’re seeing a little bit of selling pressure coming in," said Paul Kim, CEO of Simplify ETFs. Retailers, technology stocks, health care companies, and banks were among the biggest weights on the market, the AP reports. Best Buy fell 4.1%, Microsoft slid 0.8%, Abbott Laboratories dropped 1.7%, and JPMorgan Chase was 2% lower. US crude oil prices fell 1.5% and weighed down energy stocks. Exxon Mobil fell 0.8%. Ford fell 12.4% after slashing its third-quarter earnings forecast because a parts shortage will leave it with as many as 45,000 vehicles unfinished on its lots when the quarter ends Sept. 30.
Fed Chair Jerome Powell bluntly warned in a speech last month that the rate hikes would "bring some pain." "He has done everything he possibly can to signal that it's going to be another aggressive move," said Liz Young, head of investment strategy at SoFi. "He’s been clear as a bell about what they've been focused on." The Fed is expected to raise its key short-term rate by a substantial three-quarters of a point for the third time. That would lift its benchmark rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level in 14 years, and up from zero at the start of the year.
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