Wall Street Stocks Finish Mixed as Rebound Fails Ahead of Fed Event

22 Sep 2021 · 3rd Party Analysis

Wall Street Stocks Finish Mixed as Rebound Fails Ahead of Fed Event

WRITTEN BY ThorFX

In Summary

  • Stocks struggle to pare back Monday losses, Dow and S&P500 decline on Tuesday
  • Futures point higher on Wednesday as markets expect Fed’s Powell to update on policy

Wall Street Stocks Slide on Tuesday

Stocks on Wall Street finished mostly lower on Tuesday as investors attempted to claw back from steep losses realized Monday. The choppy trading session that failed to lift major US stock indexes preceded an important update from the Federal Reserve.

The regular session yesterday began on a highly positive note. Before the opening bell in New York, stock futures surged more than 1%. Futures on the Dow were higher over 500 points as market participants were aiming for a strong rebound.

However, at the open yesterday, the major averages gave away their pre-market advance and traded near the flat line. The heightened volatility was not sufficient to produce strong buying momentum and stocks retreated broadly on Tuesday.

The Dow Jones Industrial Average slipped moderately by 50.63 points, or 0.15%, to finish the session at 33,919.84. The S&P500 declined 3.54 points, or 0.08%, to close at 4,354.19. The tech-heavy Nasdaq Composite gained 32.49 points, or 0.22%, to end the day at 14,746.40.

Federal Reserve Event to be Today’s Highlight

While some investors have turned more defensive toward stocks, others say it is now the time to buy the dip if you have been waiting for one. The mixed comments by market participants come before a crucial Federal Reserve update on Wednesday.

The US Federal Reserve began a two-day meeting yesterday that will conclude today with a press conference by Jerome Powell, the Fed Chairman. The monetary policy meeting would be one of the three remaining Fed meetings for the year. The key update would be significant for the market in several ways.

Major Updates Expected

Fed Chair Powell is expected to provide insight into the central bank’s plans for slowing down the bond purchases. The strong rally in stocks since the pandemic-infused market lows in March last year is partly attributed to the Fed’s injections of $120bn in monthly asset purchases. In prior speeches, Chairman Powell has stated Fed officials have agreed to dial down the extraordinary stimulus by the end of the year.

Additionally, Mr. Powell could present more details on the potential increase of interest rates. Previously, he had signaled interest rates would be raised only after the monetary stimulus has been reversed.

Ahead of the keenly-anticipated Fed update, stock index futures on Wall Street lit up in green. Futures contracts on the Dow, the S&P500, and the Nasdaq Composite were higher by 0.4%, to 0.7% ahead of regular trading activity on Wednesday.

At the time of the event, heightened volatility could be present in the US dollar, offering chances to enter long or short trades. Stocks broadly, and individually, are also expected to increase their volatility.

Elsewhere in the Markets

In other markets, European shares searched for direction earlier today. Bourses in Europe finished Tuesday’s session highly positive with each major index up 1% or more. The Europe-wide Stoxx 600 advanced 1% to 458.68. The stock benchmark posted its biggest one-day gain since July.

Meanwhile, Royal Dutch Shell stock jumped 4% following the news that the company had agreed to sell its assets in the Permian Basin to ConocoPhillips. The deal would be worth $9.5bn in cash.

In cryptocurrencies today, bitcoin briefly dipped below $40,000 per token but quickly recovered back above the mark. Presently, the original cryptocurrency is trading above $42,000 per coin, up almost 3% on the day.

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