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Financial Markets 09/16 15:26
NEW YORK (AP) -- U.S. stocks edged back from their record heights on Tuesday
as the countdown ticked toward what Wall Street expects will be the first cut
of the year to interest rates by the Federal Reserve.
The S&P 500 fell 0.1% from its latest all-time high. The Dow Jones
Industrial Average dipped 125 points, or 0.3%, while the Nasdaq composite
slipped 0.1% from its own record set the day before.
Stocks have run to records on expectations that the Fed will announce the
first of a series of cuts to rates on Wednesday in hopes of giving the economy
a boost. The job market has slowed so much that traders believe Fed officials
now see it as the bigger danger for the economy than the threat of higher
inflation because of President Donald Trump's tariffs.
The Fed has been holding off on cuts to rates because inflation has remained
above its 2% target, and easier interest rates could give it more fuel.
A report on Tuesday said shoppers increased their spending at U.S. retailers
by more last month than economists expected. A chunk of that could be due to
shoppers having to pay higher prices for the same amount of stuff. But it could
also indicate solid spending by U.S. households could continue to keep the
economy out of a recession.
The data did little to change traders' expectations for a cut to interest
rates on Wednesday, followed by more through the end of the year and into 2026.
Such high expectations have sent stocks to records, but they can also create
disappointment if unfulfilled. That's why more attention will be on what Fed
Chair Jerome Powell says about the possibility of upcoming cuts in his press
conference following Wednesday's decision than on the decision itself.
Fed officials will also release their latest projections for where they see
interest rates and the economy heading in upcoming years, which could provide
another potential flashpoint.
For now, global fund managers are tilting their portfolios toward stocks at
the highest level in seven months, according to the latest survey by Bank of
America. That's even though a record 58% of them are also saying that stocks
look too expensive at the moment.
On Wall Street, Dave & Buster's fell 16.7% after the entertainment chain
reported a weaker profit for the latest quarter than analysts expected.
New York Times Co. fell 1.6% after Trump filed a $15 billion defamation
lawsuit against the newspaper and four of its journalists on Monday. The
lawsuit points to several articles and a book written by Times journalists and
published in the lead up to the 2024 election as "part of a decades-long
pattern by the New York Times of intentional and malicious defamation against
President Trump."
On the winning end of Wall Street was Steel Dynamics, which climbed 6.1%
after it said it's seeing improved earnings across its three business units. It
credited strong demand for steel from the non-residential construction and auto
industries, among other things.
Chipotle Mexican Grill added 1.9% after its board said the company could buy
back an additional $500 million of its stock. Such a move can send cash
directly to investors and boost per-share results.
Oracle rose 1.5% on speculation that it could be part of a deal that would
keep TikTok operating in the United States.
All told, the S&P 500 fell 8.52 points to 6,606.76. The Dow Jones Industrial
Average dropped 125.55 to 45,757.90, and the Nasdaq composite sank 14.79 to
22,333.96.
In stock markets abroad, indexes fell in Europe following a mixed showing in
Asia.
Japan's Nikkei 225 added 0.3% to finish at another record. The rally comes
despite political uncertainty after Japanese Prime Minister Shigeru Ishiba said
he is stepping down. An election within the ruling Liberal Democratic Party to
pick a new leader is expected Oct. 4.
In the bond market, the yield on the 10-year Treasury eased to 4.03% from
4.05% late Monday.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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