U.S. Stocks Move Sharply Lower As Fed Decision Looms

Stocks have moved sharply lower over the course of morning trading on Tuesday, with the major averages all showing significant moves to the downside after ending yesterday’s choppy trading session just below the unchanged line.

In recent trading, the major averages have fallen to new lows for the session. The Dow is down 458.25 points or 1.4 percent at 33,593.45, the Nasdaq is down 147.21 points or 1.2 percent at 12,065.38 and the S&P 500 is down 58.12 points or 1.4 percent at 4,109.75.

The weakness on Wall Street comes as some traders look to cash in on recent strength in the markets ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

With the Fed widely expected to raise interest rates by another 25 basis points, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

CME Group’s FedWatch Tool is currently indicating an 87.5 percent chance the Fed will raise rates by 25 basis points and a 72.9 percent chance the central bank will subsequently leave rates unchanged in June.

Concerns about lawmakers’ struggles to reach an agreement on raising the U.S. debt ceiling are also weighing on Wall Street.

U.S. Treasury Secretary Janet Yellen has warned the Treasury might run out of money to cover obligations as soon as June 1.

In U.S. economic news, the Commerce Department released a report showing new orders for U.S. manufactured goods increased by slightly more than expected in March.

The Commerce Department said factory orders advanced by 0.9 percent in March after slumping by a revised 1.1 percent in February.

Economists had expected factory orders to climb by 0.8 percent compared to the 0.7 percent decrease originally reported for the previous month.

A separate report released by the Labor Department showed job openings in the U.S. fell by more than expected in the month of March.

The Labor Department said job openings decreased to 9.590 million in March from an upwardly revised 9.974 million in February. With the drop, job openings fell to their lowest level since April 2021.

Economists had expected job openings to decline to 9.775 million from the 9.931 million originally reported for the previous month.

Sector News

Energy stocks have moved sharply lower on the day, with another steep drop by the price of crude oil weighing on the sector.

After slumping $1.12 to $75.66 a barrel in the previous session, crude for June delivery is plunging $2.79 to $72.87 a barrel amid concerns about the outlook for demand.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index is down by 5.0 percent and the NYSE Arca Oil Index is down by 4.6 percent.

Substantial weakness has also emerged among banking stocks, as reflected by the 4.4 percent nosedive by the KBW Bank Index. The index has tumbled to its lowest intraday level in over two years.

Networking, brokerage and steel stocks are also seeing significant weakness, while gold stocks are among the few groups bucking the downtrend amid a notable increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan’s Nikkei 225 Index crept up by 0.1 percent, while Australia’s S&P/ASX 200 Index slid by 0.9 percent following a surprise interest rate hike.

Meanwhile, the major European markets have all moved notably lower on the day. While the French CAC 40 Index has slumped by 1.3 percent, the German DAX Index is down by 1.0 percent and the U.K.’s FTSE 100 Index is down by 0.9 percent.

In the bond market, treasuries have shown a strong move back to the upside following the steep drop seen on Monday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 12.6 basis points at 3.448 percent.

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