US stocks fell on Tuesday as the Federal Reserve prepared to start its two-day rate-setting meeting, with a profit warning from Ford Motor Co., the latest example of supply chain problems still hitting businesses.
What is happening
Dow Jones Industrial Average DJIA,
It fell 340 points, or 1.1%, to 30,679 points, after dropping nearly 459 points at its lowest level in the session.
S&P 500 SPX Index,
It was down 39 points, or 1%, at 3,840.
It fell 66 points, or 0.6%, to 11,469 points.
What is driving the markets
Monday’s market action was without convincing, as stocks opened lower but closed higher at the lowest volume since August 29.
Looming on the next FOMC decision is in the market, as investors grapple not only with whether the central bank will raise interest rates by 75 basis points or raise rates by 100 basis points, but also how far the Fed will signal higher rates. on a future. The meeting starts on Tuesday and ends on Wednesday.
“Volumes remain light and the mood is cautious, with few looking to take big positions before hearing what the Fed has to say and as policy makers see prices heading towards the end of the hiking cycle,” said Fiona Cincotta, chief financial markets analyst at City Index. in a note. “That’s what will drive the markets, not tomorrow’s rate hike, but what the Fed plans to do next.”
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Meanwhile, Treasury yields, which move opposite the price, continued to rise, with the TMUBMUSD10Y 10-year bond rate,
It jumped 12 basis points to trade near 3.60% after closing Monday at its highest level since 2011. The two-year yield is TMUBMUSD02Y,
The pressure continued towards the 4% threshold. Higher yields can affect stocks, making government bonds look more attractive for riskier assets like stocks.
Inflation problems aren’t limited to Riksbank on Tuesday opting for a 100 basis point hike, and analysts expect at least a half point rise when the Bank of England meets on Thursday.
Data showed that initial homes in the US rose 12.2% in August after a 10.9% decline in July, while building permits fell 10% in August.
Companies in focus
Ford Motor Company
On Monday evening, it said inflation and a shortage of parts would leave it with more incomplete cars than expected and that payments to suppliers would be about $1 billion more than expected. With that, Ford reiterated its full-year operating profit forecast. Shares fell 9.5 percent.
Announcing app store price hikes in a number of Asian and European countries, likely in response to the rising US dollar DXY,
Shares rose 1.2%.
Shares fell 0.7 percent after the supermarket chain said it had adopted a shareholder equity plan, also known as a “toxic pill,” which takes effect immediately and lasts for one year.