U.S. stocks surrendered some of their earlier gains Tuesday to trade mostly lower amid subdued activity as investors held off on making big bets ahead of the Federal Reserve’s monetary policy decision. Concerns about continuing trade tensions also lingered, limiting the market’s upside momentum.
Where are the major benchmarks trading?
The Dow Jones Industrial Average DJIA, -0.19% slipped 17 points to 26,544 and the S&P 500 SPX, -0.09% shed a point to 2,917. The Nasdaq Composite Index COMP, +0.17% gained 13 points, or 0.2%, to 8,006.
Read: Analyst warns of ‘Jenga top’ for ‘top-heavy’ stock market
What’s driving markets?
Investors are looking ahead to Wednesday’s policy decision by the Fed, which is widely expected to announce a 25 basis point interest-rate increase. The meeting will be followed by Fed Chairman Jerome Powell’s news conference during which investors are expected to seek further insight into the state of the economy, the impact of trade issues, and the path of future rate moves.
Read more: Economy keeps pumping, but now the Fed wants to let out some air
Also: The Powell Fed can make history if it can slow the economy without crashing it
Issues surrounding trade remained at the top of investors’ list of worries. While Wall Street has repeatedly ignored the threat of rising trade tensions, focusing instead on strong economic data and corporate fundamentals, trade jitters have led to short-term volatility on fears that the situation could escalate further.
Don’t miss: Strong economy and stock market may lead Trump to ‘major miscalculation’, say JPMorgan analysts
On Monday, Chinese officials fired back against President Donald Trump, accusing him of “trade bullyism” and pushing an “America First” agenda at the cost of international relations. The comments came as the latest exchange of tariffs took effect—10% tariffs on $200 billion worth of Chinese goods, which was met with $60 billion in tariffs on U.S. goods by China.
In the latest economic data, home prices rose 0.2% in July, the slowest pace of growth since last summer. Separately, the U.S. consumer confidence index rose to 138.4 in September from 134.7.
What are market analysts saying?
“We stick to our guns that further [trade] escalation may continue to have diminishing market effects, especially if the measures are already flagged well ahead before the official announcement,” said Charalambos Pissouros, senior market analyst at JFD Brokers.
“Investors have been digesting the idea of a full-blown trade war for months now, and on top of that, they are already aware of what could be the next steps. Yesterday’s market reaction corroborates our view,” he added, noting that the move lower was relatively modest.
“Recent speeches from Fed officials have noted that rates are approaching neutral and are on a path to turn restrictive amid continued economic expansion,” said Michelle Meyer, U.S. economist at Bank of America Merrill Lynch. As a result, the Fed is expected to communicate that its policy will no longer be accommodative by revising its language in the statement Wednesday.
What stocks are in focus?
Michael Kors Holdings Ltd. KORS, +1.30% shares rose 1.4% after the fashion company said it would buy Italy-based luxury goods company Gianni Versace SpA in a deal valued at $2.12 billion.
Sonic Corp. SONC, +18.42% rallied 19% on news that Inspire Brands, which has both company-owned and franchised restaurant brands, agreed to acquire the drive-in fast-food chain for about $2.3 billion, including assumption of Sonic’s debt.
AstraZeneca PLC AZN, +2.47% said that data showed its cancer treatment, Imfinzi, reduced the risk of death for patients by nearly a third compared with the standard of care. The stock advanced 2.3%.
Shares of Intel Corp. INTC, -1.77% fell 1.9% after Raymond James downgraded the stock to underperform.
The co-founders of Instagram announced they have resigned from Facebook Inc. FB, -0.17% and that they plan to leave the company in the coming weeks. Shares of the social-media giant slid 0.1%.
Ascena Retail Group Inc. ASNA, +12.47% soared 13% after it late Monday reported earnings and sales that beat expectations.
Novartis AG NVS, +0.71% plans to cut more than 2,000 jobs as part of a global restructuring, the latest move by its new chief executive to refocus the pharmaceutical giant toward higher-value drugs. Shares rose 0.8%.
What are other markets doing?
Trading in Asia was mixed, with Japanese equities rising but stocks in China falling on trade uncertainty. European stock indexes were broadly higher.
Crude-oil prices CLK9, +0.31% rose moderately, gold GCM9, +0.07% settled fractionally higher while the U.S. dollar index DXY, -0.09% was flat.
Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.