The Fed is widely expected to announce a third cut to its main interest rate for this year on Wednesday, and officials are also scheduled to unveil projections about where they see rates heading in upcoming years.
Expectations for coming cuts have been on the downswing, though, as inflation looks to be stubborn to slow the last bit down to the Fed’s 2 per cent target.
A report on Tuesday showed sales at US retailers grew more last month than economists expected. That could be an indication of an economy that doesn’t need much more help from easier interest rates. While lower rates can goose the economy, they can also give inflation more fuel.
“The Fed is still on track to cut rates tomorrow, but more strong economic data could make it more likely they’ll pause in January,” according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
In the bond market, Treasury yields held relatively steady following the report. The 10-year Treasury yield edged down to 4.38 per cent from 4.40 per cent late Monday. The two-year yield, which more closely tracks expectations for the Fed, slipped to 4.24 per cent from 4.25 per cent.
On Wall Street, Broadcom fell 5.1 per cent and was heading for its first loss following two big gains where it led the market. The tech company’s stock leaped 24.4 per cent and then 11.2 per cent in consecutive days after delivering a stronger profit report than analysts expected and giving a forecast for upcoming revenue that was also encouraging thanks to demand for its artificial-intelligence products.
Broadcom and Nvidia were the two heaviest weights on the S&P 500 on Tuesday.
Loading
Pfizer helped limit the losses after rising 4.6 per cent. It gave a forecast for profit next year that was stronger than some analysts’ estimates. Other health care stocks were also at the front of the market, including gains of 1.2 per cent for Johnson & Johnson and 1 per cent for Baxter International.
In stock markets abroad, London’s FTSE 100 fell 0.8 per cent ahead of an announcement on interest rates by the Bank of England on Thursday.
Japan’s central bank will also meet on interest rates later this week, and Tokyo’s Nikkei 225 slipped 0.2 per cent. Unlike others around the world, the Bank of Japan is raising rates after keeping its policy rate below zero for years.
Bitcoin set a record above $US108,000 before pulling back toward $US107,300, according to CoinDesk.com. It’s catapulted from roughly $US44,000 at the start of the year, riding a recent wave of enthusiasm that Trump will create a system that’s more favourable to digital currencies.
AP
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
