Investing.com – The S&P 500 eased from record highs Tuesday paced by a decline value stocks and a retreat in tech as the Federal Reserve’s kicked off its two-day meeting.
The Dow Jones Industrial Average fell 0.47%, or 147 points, the S&P 500 fell 0.1% after hitting a record high of 3,965.90 and the Nasdaq Composite was up 0.43%, though had risen more than 1% intraday.
Big tech cut some gains after advancing sharply early intraday even as U.S. rates show little risk of resuming their rapid acceleration that had put long-duration growth stocks in the crosshairs earlier this month.
Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) were off the day’s highs, but still in the green as the U.S. United States 10-Year yield flirted with 1.6%.
With a day to go until the Federal Reserve reveals its monetary policy and chairman Jerome Powell makes an appearance, some have called for caution.
The central bank is expected to keep rates unchanged and its $120 billion pace of monthly bond purchases on hold. An update from the Powell, however, has the potential to trigger a move in bond yields that would likely move stocks.
“[W]e do expect the rate move to continue in the very near term. The Fed as ever remains a key wildcard,” Jefferies (NYSE:JEF) said. “So we do think folks need to watch the price action quite closely here going into [this week’s] Fed meeting.”
The note of caution has been echoed by the latest Bank of America (NYSE:BAC) survey showing that fund managers are more worried about the Fed tightening policy too early, a so-called taper tantrum, and a spike in inflation than the Covid-19 pandemic.
On the economic front, meanwhile, the consumer was in the spotlight as retail sales fell by more than expected. Economists, however, shrugged off the weaker headline number, blaming it on weather-related events as a cold snap wrecked havoc across the U.S.
“The February weakness was weather-related and will likely prove temporary. Based on card spending data, the dip was concentrated in the third week of the month which coincided with the winter storms that caused extended power outages in Texas,” Jefferies said in a note.
In industrials, airline stocks including American Airlines, United Airlines Holdings (NASDAQ:UAL) and Delta Air Lines Inc (NYSE:DAL) took a breather following a surge a day earlier. Optimism on airlines, however, has picked up in recent weeks on signs of a recovery in air travel demand.
Energy was down more than 2% as oil prices tracked lower on concerns of an another weekly build in U.S. crude stockpiles, with data from the American Petroleum Institute expected later on Tuesday.
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