Wall Street dips as FedEx issues profit warning; all eyes on Fed
By Medha Singh and Ambar Warrick | Wed, September 18, 2019 11:42 EDT
(Reuters) - U.S. stocks came under pressure on Wednesday after a profit warning by FedEx, while investors waited for a decision on interest rates and clues on the future of U.S. monetary policy from the Federal Reserve.
Shares of the package delivery company
The stock was the biggest drag on the S&P 500 <.SPX> and drove a 1.9% drop in shares of rival United Parcel Service Inc
The Dow Jones Transport Average <.DJT> lost 1.78%, while the broader industrial sector <.SPLRCI> was off 0.7%. The sector was the biggest decliner among eight of the 11 major S&P sectors in the red.
Investors are now waiting for the Fed's policy statement, due at 2:00 p.m. ET (1800 GMT), followed by Chair Jerome Powell's address a half hour later.
The central bank is expected to lower interest rates by a quarter percentage point for the second time in three months, but a deep divide among policymakers has led traders to abandon all bets on a third reduction this year.
"The market is likely seeking confirmation from the Fed that the cuts in July and likely this afternoon are not simply a mid-cycle adjustment and that the FOMC stands ready to take aggressive action if needed," said Ryan Larson, head of equity trading at RBC Global Asset Management in Chicago.
Earlier in the day, the central bank injected more cash into the banking system as the key interest rate pierced above its targeted range for the first time since the financial crisis. That puts pressure on policymakers to come up with long-term fixes for the funding squeeze.
In response, trader bets for a 25 basis point reduction in interest rates shot back up to 72.7% after falling to nearly 50% on Tuesday, according to CME Group's FedWatch tool.
The interest-rate sensitive banking index <.SXPBK> slipped 0.49% and was on pace for a third day of losses.
Expectations of lower rates have spurred a Wall Street rally this year, with the benchmark S&P 500 <.SPX> now about 1% below its all-time high hit in July.
At 11:25 a.m. ET, the Dow Jones Industrial Average <.DJI> was down 60.42 points, or 0.22%, at 27,050.38, the S&P 500 <.SPX> was down 8.17 points, or 0.27%, at 2,997.53. The Nasdaq Composite <.IXIC> was down 26.96 points, or 0.33%, at 8,159.06.
In a bright spot, Versace-owner Capri Holdings Ltd
The S&P index recorded 13 new 52-week highs and one new low, while the Nasdaq recorded 31 new highs and 22 new lows.
(Reporting by Medha Singh and Ambar Warrick in Bengaluru; Editing by Anil D'Silva)
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