LONDON: U.S. stocks slipped for a second day in a row Tuesday on a combination of slumping oil prices, soft economic data and mixed earnings, with investors cautious ahead of the Federal Reserve’s policy statement.
“The overall economic picture right now is softer, there is not much good news in today’s data,” said David Kelly, chief market strategist, J.P. Morgan Funds. He doesn’t expect the Fed to make a move on interest rates until December.
The Fed’s two-day policy meeting began Tuesday, with a statement due Wednesday afternoon. Investors are bracing for whether the central bank will hint at a December hike in interest rates.
“In sum, the economic evidence continues to flow in a direction counter to the chatter around the FOMC (Federal Open Market Committee) table—when is the best time to tighten because higher employment levels are raising the forward risk of inflation,” said Steve Blitz, chief economist at ITG, in emailed notes.
The S&P 500 SPX, -0.26% fell 5.29 points, or 0.3%, to close at 2,065.89. Energy stocks led losses after a renewed slide in crude oil prices; the S&P 500 energy sector closed down 1.2%.
The Dow Jones Industrial Average DJIA, -0.24% dropped 41.62 points, or 0.2%, to close at 17,581.43, while the Nasdaq Composite COMP, -0.09% declined 4.56 points to finish at 5,030.15.
“After stocks moved higher last week with the help of policy action in China and promised action from the ECB, U.S. stocks have been listless to down this week as the hangover from the central bank party sinks in,” said Bill Stone, chief investment strategist at PNC Asset Management Group.
In economic news, durable-goods orders fell in September, marking a second straight drop amid softness in manufacturing activity. The Conference Board said consumer confidence in October fell to a reading of 97.6, down from a revised 102.6 in September. On the housing front, average home prices increased in line with expectations.
“The industrial sector, as reflected by the durable goods data, is close to being in recession and would probably be in one if not for the strength in vehicle production,” Blitz said.
Katie Stockton, chief technical strategist at BTIG, said the divergence between large-cap stocks and small- and midcap shares points to a further pullback. “We would view weakness as an opportunity to add exposure, noting that intermediate-term momentum has improved significantly this month around the world,” she said.
