Stocks are in the red Tuesday as conjecture over the Federal Reserve continues to swirl. Why are stocks down today?
Well, it appears investors are showing some sheepishness ahead of the Fed’s next rate decision. Indeed, today marked the first day of the two-day Federal Open Market Committee (FOMC) policy meeting, the central bank’s first meeting of the new year.
While interest rate traders are currently pricing in a 97% chance that the central bank holds rates steady this time around, investors are anxious over a shift in sentiment in Fed Chair Jerome Powell’s closing comments.
If you recall, Powell took a surprisingly dovish tone toward the end of 2023. Since then, however, there has been some pushback, with a few Fed members hinting that the first rate cut may not come until the second half of the year. Others foresee the Fed cutting rates as early as March, with the war on inflation well on its way to an amicable conclusion.
Why Are Stocks Down Today?
It seems the tech sector is the big loser today. The tech-heavy Nasdaq Composite is down about 0.7% as of this writing. After trending down most of the day, however, the S&P 500 actually closed basically even on the day, down just 0.06%.
Even with today’s losses, both the S&P and Nasdaq are up 3.8% and 5% respectively so far this year. Despite the uncertainty fueling the market, some feel confident that stock indices still have room to climb.
“Technically, the table is set for U.S. equity indexes to trade higher in the short term,” said Calamos Investments Senior Vice President Joseph Cusick. “But will the fundamental risks evolve in the coming days and undercut current price action? Until bears take control, it remains the case that markets at fresh all-time closing highs demand respect.”
Earnings season is also in full swing, with Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) reporting earnings after market close today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
