Most stock indices are seeing selling pressure today as investors approach the markets cautiously. With many top stocks down today, investors may be left scratching their heads. After all, it’s been quite a nice rally to kick the year off thus far.

That said, there appear to be a few clear reasons for today’s relatively anxious price action. The Federal Reserve is set to release its minutes from its Federal Open Market Committee (FOMC) meeting later today. These minutes are expected to highlight just how long a Fed pause may be and what Fed officials think about where inflation and the economy are headed from here.

Additionally, investors have some poor data out of China to chew on today. The Caizin/S&P Global servicing purchasing managers’ index (PMI) data were released today. This number slumped to 53.9 for June, the lowest reading since the Covid-19 hit.

Finally, ongoing tensions between the U.S. and China over semiconductors have investors concerned about what’s to come in 2023.

Why Are Stocks Down Today?

These three factors are undoubtedly crucial for investors to consider. How the Fed will position itself from here, the strength of the Chinese rebound and ongoing geopolitical concerns are among the myriad concerns hampering the market right now. Accordingly, until the dust settles, we may see some rather bumpy price action in the near term.

I suspect that once the Fed meeting minutes are released, and investors can see what the Federal Reserve wants to do, we may revert to the bull market party that has been much of 2023. That said, there’s always the risk of ultra-hawkish language in the release. Thus, it’s possible that today’s timid price action could prove to be warranted if additional risks are pointed out in the report.

Over the coming weeks, I think a key driver of the directional move of the market will likely be investors’ interpretation of how long the Fed rate hike pause will last. Accordingly, today’s data may prove to be very important over the medium term. Investors ought to take notice.