US stocks fall as caution rules ahead of Fed meeting

With the Fed’s latest monetary policy meeting set to begin tomorrow, the sentiment of the market has turned cagey, sending US shares lower.

By early afternoon in New York, shares were perched near their lows for the day, with the Dow Jones off around 0.3% or 45 points at 15,513 and the S&P and NASDAQ down similar percentage amounts.

Some of the caution in the market may have been instigated by signs of slowing in the US housing market, suggest by a report today from the National Association of Realtors. The NAR’s pending homes sales index dropped 0.4% in July, which should in theory translate into lower existing home sales next month.

May’s big rise in the pending home sales index did not translate into strong existing home sales in June as rising mortgage rates are causing potential buyers to rethink their options, according to the NAR. Rising house prices will not have helped the situation and we will see more pricing data tomorrow with the home price index from Case-Shiller.

One of the key features of this week’s economic news will be what the major central banks are up to. The Fed begins its latest two-day meeting tomorrow and there is a good chance that Ben Bernanke will give his clearest, most specific signals yet for when the Fed intends to start reducing its monthly asset purchases.

The ECB and the Bank of England are also due to meet this week to decide on their own monetary policy, and it is likely to be forward guidance that has the biggest impact on the market rather than the rate decisions themselves.

For now, investors are playing it safe, and that means money being kept off the table, which is hampering the US stock market.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.