The S&P 500 ended lower on Tuesday, as the index was unable to bounce back from a sell-off in the previous session, with a key policy statement from the Federal Reserve on deck that will reveal how aggressive the central bank's policy path will be.
Analysts had predicted that the Fed would hike by 50 basis points at the end of its meeting on Wednesday.
After Friday's higher than expected consumer price index CPI data for May, views that a 75 basis point hike was on the table have been growing. A report from the Wall Street Journal on Monday and forecasts from several banks, including JP Morgan and Goldman Sachs, signaled a 75 basis point hike.
According to CME's FedWatch Tool, Traders are pricing in a more than 90% chance of a 75 basis point hike, up from 3.9% a week ago.
The producer prices index PPI remained high on Tuesday, as gasoline prices jumped, despite the fact that it was slightly less than expectations on a year-over-year basis for May.
Greg Bassuk, CEO of AXS Investments in Port Chester, New York, said that even though we are seeing more red and more negative pressure today, we believe that this is really a wait and see day.
The PPI numbers today put to bed any questions about the extent of rising prices and inflation - the big question is how aggressive the Fed is going to be this week and how much they are going to do to help the recessionary fears. The Dow Jones Industrial Average fell by 151.91 points, or 0.5%, to 30,364. The S&P 500 lost 14.15 points, or 0.38%, to 3,735. 48 and the Nasdaq Composite added 19.12 points, or 0.18%, to 10,828. The S&P 500 suffered its fifth day of decline, marking its longest losing streak since January. Monday's decline put the index down more than 20% from its most recent record high, confirming a bear market began on January 3, according to a commonly used definition.
Pool Corp., a pool supplies distributor, fell 5.27% compared to individual stocks after Jefferies cut its price target on the stock to $400 from $485.
After raising its quarterly dividend by more than 50%, FedEx Corp surged 14.41%, while Oracle Corp gained 10.41% after posting upbeat quarterly results on demand for its cloud products.
Continental Resources Inc. jumped 15.07% after the shale producer received an all-cash buyout offer from its founder Harold Hamm, valuing the company at $25.41 billion.
The volume on US exchanges was 12.49 billion shares, compared to the 12.01 billion average for the full session over the last 20 trading days.
Declining issues favored decliners by a 1.96 to 1 ratio on the NYSE, and a 1.36 to 1 ratio on Nasdaq.
The S&P 500 posted 2 new 52 week highs and 77 new lows, the Nasdaq Composite had 11 new highs and 641 new lows.