Stocks retreated on Tuesday as Wall Street awaited the results of this week’s Federal Reserve policy meeting.
The Dow Jones Industrial Average lost 268 points, or 0.8%. The S&P 500slid 0.7%, while the Nasdaq Composite dropped 0.6%.
Deere, often seen as a barometer of future economic activity, fell more than 2% in the session. The drop came after investment bank Evercore ISI downgraded the stock to in-line from outperform due to agricultural production cuts.
The central bank’s two-day meeting begins on Tuesday. The Fed is not expected to raise rates when announcing its decision Wednesday, with traders pricing in a 99% probability that the central bank skips a hike, according to CME Group’s FedWatch tool, a gauge of pricing in fed funds futures. Traders are putting just a 29% chance of a hike in November.
The Fed will also offer economic forecasts on Wednesday. Investors will watch for commentary around the path of inflation and future of monetary policy.
“We know that we’re closer to the end of the hiking cycle than the beginning,” said Kevin Gordon, senior investment strategist at Charles Schwab. “How they’re viewing the next year out, or at least turning the corner in 2024, is much more important.”
Investors also had other reasons for skittishness.
The 10-year U.S. Treasury yield neared a high not seen since 2007 on Tuesday. Meanwhile, oil prices advanced amid concerns around supply.
Leadership of the striking United Auto Workers union said more workers could be called on to withhold labor if progress is not made by a Friday deadline. Stellantis climbed about 2% in Tuesday’s session, while General Motorsand Ford each advanced more than 1%.