U.S. stocks fell shortly after the opening bell Wednesday, ahead of the Federal Reserve’s monetary policy decision, more earnings from major companies and a slew of economic data.
The S&P 500 retreated 0.2%, after climbing 1.5% on Tuesday. The Dow Jones Industrial Average fell 238 points, or 0.7%, and the Nasdaq Composite declined 0.1%.
Stocks have had a strong start to the year, with the S&P 500 gaining more than 6% in the first month of 2023, and the Nasdaq Composite surging 11% in its best January since 2001. Investors are widely positioning for a mild economic slowdown, moderating inflation and a less-aggressive stance from central banks.
The Fed is due to release its interest-rate decision at 2 p.m. ET. Markets are pricing in a 0.25 percentage point increase from the Fed with near-certainty. This would mark a further deceleration, after it slowed to a 0.5-percentage-point increase at its last meeting.
“It’s all about the Fed and what they tell us,” said Arun Sai, multiasset strategist at Pictet Asset Management. “The focus is on how the real economy can digest what central banks have done. So all eyes are on the earnings season and what cues we can get on a soft landing.”
Corporate results continued to drive major moves, with shares in
all dropping following earnings releases, and those in
gaining. Snap shares declined 12% after the social-media company warned that sales in the current quarter are likely to drop and posted a wider net loss than Wall Street was expecting.
Facebook’s parent company
is among companies preparing to release earnings Wednesday, with its quarterly results due after markets close.
ADP’s employment report showed the U.S. private sector added 106,000 jobs in January, coming in below economists’ forecasts. Other readouts on the economy due Wednesday include government data on job openings at 10 a.m. and purchasing managers indexes for the manufacturing sector at 9:45 a.m. and 10 a.m.
“For everybody, there is a level of data dependency. It’s telling us what to expect for the coming weeks or months from the central banks,” said
chief global strategist at Principal Asset Management. “Our focus is still on inflation and the labor market and what that means for the Fed.”
The yield on the benchmark 10-year Treasury note declined to 3.464% from 3.527% the previous day. Yields fall when prices rise.
Oil prices edged down, with the most-actively traded contract for global crude benchmark Brent falling 0.2% to trade at $85.26 a barrel.
Overseas, the pan-continental Stoxx Europe 600 rose 0.2%. In Asia, most major benchmarks rose. The Shanghai Composite added 0.9% and Hong Kong’s Hang Seng Index climbed 1.1%. South Korea’s Kospi Composite advanced 1%.
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