Wall Street slips ahead of Federal Reserve commentary

[Pelican Press 0]

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Wall Street slips ahead of Federal Reserve commentary

Wall Street’s main indexes have fallen, with technology stocks leading declines as investors awaited commentary from Federal Reserve officials to gauge the effects of US President Donald Trump’s tariffs on the central bank’s policy path.

At least seven Fed officials including St Louis Fed President Alberto Musalem are scheduled to speak through the day.

Traders currently expect at least two 25-basis-point rate cuts from the US Federal Reserve by the end of 2025, with the first one expected in September, according to data compiled by LSEG.

Fed officials on Monday flagged the ramifications of the latest downgrade of the US government’s sovereign credit rating and uneasy market conditions.

“The Fed is trying to not have (tariffs) influence what they do and they’ve said so,” said Thomas Martin, senior portfolio manager at Globalt Investments.

“They certainly don’t want to raise (interest rates), and so standing pat is a pretty good thing to do.”

In early trading on Tuesday, the Dow Jones Industrial Average fell 80.50 points, or 0.19 per cent, to 42,711.57, the S&P 500 lost 20.34 points, or 0.34 per cent, to 5,943.26, and the Nasdaq Composite lost 86.45 points, or 0.45 per cent, to 19,129.01.

Eight of the 11 S&P sub-sectors traded lower, with information technology, which was down 0.7 per cent, being the worst hit.

Most megacap and growth stocks fell although Tesla was an outlier with a 3.4 per cent rise after Elon Musk said at an economic forum in Qatar that he was still committed to being the company’s CEO in five years’ time.

Retailer Home Depot gained 1.1 per cent after beating Wall Street estimates for first-quarter sales.

Amer Sports jumped 18.4 per cent after raising its 2025 revenue forecast.

If current losses hold, the S&P 500 is set to snap a six-day winning streak and the Nasdaq is on pace for its first loss in three sessions.

The S&P 500 ended flat on Monday as investors assessed the implications of Moody’s downgrading the US sovereign credit rating to “Aa1” from a pristine “Aaa”, citing the government’s $US36-trillion ($A56-trillion) outstanding debt and interest.

Concerns about mounting US debt remained in focus, with a vote on Trump’s sweeping tax-cut bill in the House of Representatives expected this week.

“We have a tremendously unified party,” Trump told reporters as he arrived at Capitol Hill on Tuesday to encourage Republican lawmakers to resolve their differences over the bill that encompasses much of his domestic agenda.

US stocks have had a solid month so far, with the S&P 500 now more than 17 per cent higher than its April lows, when global markets were jolted by Trump’s reciprocal tariffs.

A pause in the tariffs, a temporary trade truce between the US and China and tame inflation data pushed equities higher, although the S&P 500 is still about 3.0 per cent from its record highs.

Preliminary readings of the May Purchasing Managers Index are due later in the week.

AI-darling Nvidia is scheduled to report quarterly earnings on May 28.

Declining issues outnumbered advancers by a 1.84-to-1 ratio on the NYSE and by a 1.71-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and no new lows while the Nasdaq Composite recorded 23 new highs and 11 new lows.

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