Wall Street fell on Tuesday as investors focused on data showing a slowing economy ahead of this week’s US Federal Reserve meeting in Jackson Hole, Wyoming.
The S&P 500 and Dow Jones industrial index fell after data showed that private sector business activity in the United States contracted for a second straight month in August, with particular softness in the services sector as demand weakened in the face of inflation and tighter financial conditions.
S&P Global Purchasing Managers’ Composite Indexor PMI, in August fell to 45 this month, the lowest reading since February 2021, from a final reading of 47.7 in July. A reading below 50 indicates reduced activity.
Of the S&P 500’s 11 sector indexes, eight declined, led by real estate, which fell 1.71%, followed by health care, which lost 1.47%.
Stocks fell in late sessions ahead of the central bank’s meeting in Jackson Hole, where Federal Reserve Chairman Jerome Powell on Friday is expected to reinforce a firm commitment to end inflation, which is hitting four-decade highs.
Traders are divided between expectations for a 50 basis point hike by the central bank and a 75 basis point hike after several policymakers recently abandoned expectations of a dovish reversal and emphasized the Fed’s commitment to tackling inflation.
“What we saw last week was the realization that the Fed could raise interest rates by 75 basis points in September,” said Jake Dollarhyde, chief executive of Longbow Asset Management in Tulsa, Oklahoma. “Market Fears Powell Will Return to Hawkish Position.”
Tthe benchmark 10-year bond yield rose to its highest level since late July.
Afterward, Zoom Video Communications Inc fell about 15%. the former “stay at home” stock favorite cut annual forecast of profits and revenues.
After a rough start to the year, markets started to rally from mid-June on hopes that inflation had peaked, but what the summer rally collapsed last week thanks to renewed fears around an aggressive tightening of monetary policy by the Fed.
In the afternoon, the S&P 500 was down 0.14% at 4,132.39.
The Nasdaq rose 0.19% to 12,404.59, while the Dow Jones Industrial Average fell 0.45% to 32,915.83.
S&P 500 Energy Index grew by 3.3%, tracking the jump in oil prices as supply tightens is back in the spotlight.
Macy’s Inc MNrose 3.2% after a retail win quarterly earnings estimates, while Palo Alto Networks Inc up 12% after the cybersecurity firm posted upbeat quarterly results and announced a stock split plan.
In the US stock market, advancers outnumbered decliners by a ratio of 1.1 to one.
The S&P 500 posted one new high and 30 new lows; The Nasdaq recorded 29 new highs and 133 new lows.