U.S. Stocks Turning In Mixed Performance Ahead Of Fed Announcement

After an early move to the upside, the major U.S. stock indexes have moved in opposite directions over the course of the trading session on Tuesday. While the Dow remains in positive territory, the Nasdaq and the S&P 500 have pulled back into the red.

Currently, the major averages remain on opposite sides of the unchanged line. The Dow is up 164.28 points or 0.4 percent at 40,704.21, but the Nasdaq is down 74.71 points or 0.4 percent at 17,295.49 and the S&P 500 is down 4.51 points or 0.1 percent at 5,459.03.

The mixed performance on Wall Street comes as traders look ahead to the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but the accompanying statement could have a significant impact on the outlook for the central bank’s next decision in September.

With Fed officials repeatedly saying they need “greater confidence” inflation is slowing before cutting rates, recent inflation data has led to optimism about a September rate cut.

According to CME Group’s FedWatch Tool, there is currently an 87.7 percent chance the Fed will lower rates by a quarter point in September and an 11.9 percent chance of a half point rate cut.

Traders are also looking ahead to release of earnings news from companies like Microsoft (MSFT), Advanced Micro Devices (AMD) and Starbucks (SBUX) after the close of today’s trading.

The advance by the Dow comes despite a steep drop by shares of Merck (MRK), with the drug giant plummeting by 9.9 percent.

The sell-off by Merck comes after the company reported better than expected second quarter results but provided disappointing full-year earnings guidance.

Shares of Procter & Gamble (PG) have also plunged by 6.3 percent after the consumer products giant reported second quarter earnings that beat analyst estimates but weaker than expected revenues.

Meanwhile, Dow components Goldman Sachs (GS), Travelers (TRV) and JPMorgan Chase (JPM) are posting strong gains on the day.

Sector News

While most of the major sectors are showing only modest moves on the day, airline stocks have moved sharply higher, with the NYSE Arca Airline Index soaring by 4.4 percent.

Shares of JetBlue (JBLU) have spiked by 22.4 percent after the airline reported an unexpected second quarter profit on better than expected revenues.

Substantial strength is also visible among telecom stocks, as reflected by the 3.5 percent surge by the NYSE Arca North American Telecom Index. The index has reached its best intraday level in over a year.

Network solutions provider Lumen Technologies (LUMN) has helped lead the telecom sector higher, skyrocketing by 46.4 percent.

Banking, oil producer and networking stocks are also seeing notable strength, while pharmaceutical and semiconductor stocks have moved to the downside.

A steep drop by shares of Lattice Semiconductor (LSCC) is weighing on the semiconductor sector after the chipmaker reported weaker than expected second quarter results and provided disappointing third quarter revenue guidance.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Tuesday. Hong Kong’s Hang Seng Index tumbled by 1.4 percent and South Korea’s Kospi slumped by 1.0 percent, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index has advanced by 0.7 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

In the bond market, treasuries are showing a lack of direction as trades look ahead to the Fed announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 4.173 percent.

Business News