Stocks slid on Tuesday as the Federal Reserve kicked off its two-day policy meeting and Wall Street looked ahead to another large rate hike due out Wednesday.
The Dow Jones Industrial Average fell 239 points, or 0.77%. The S&P 500 shed 0.7% and the Nasdaq Composite slid 0.2%.
The Federal Open Markets Committee begins its September meeting on Tuesday, where central bankers are expected to announce a 0.75 percentage point rate hike on Wednesday. Stocks have tumbled in recent weeks as comments from Fed Chair Jerome Powell and an unexpectedly hot August consumer price index report caused traders to prepare for even higher rates until inflation cools.
Rates marched higher on Tuesday with the yield on the 2-year Treasury note notching a fresh high dating back to late 2007. The yield on the 10-year Treasury traded at 3.593% — near levels not seen since 2011.
The move higher in the 10-year yield is likely contributing to the turmoil in equities markets on Tuesday, said Cresset Capital’s Jack Ablin.
“Investors have pretty well digested the 75 basis point hike tomorrow but perhaps there’s some concern that the rhetoric at the press conference could be still extremely hawkish,” he added.
Meanwhile, Ford shares slumped 9% after it announced that supply chain issues would cost the automaker an extra $1 billion in the third quarter.
Housing market data released Tuesday showed an unexpected jump in starts for August, although building permits saw the biggest decline since April 2020.
During a choppy trading session on Monday, stocks rose in the afternoon to snap a two-day losing streak and claw back some of their recent losses.