Retail pressures on Wall Street on opening day as Fed meeting kicks off
Wall Street opened the session in the red, primarily influenced by the retail sector, after sector heavyweight Walmart cut its earnings estimates for the year, as inflation continues to weigh on consumer spending.
The Dow Jones Industrial Average fell 0.32% to 3,1891.07 points, and the S&P 500 lost 0.63% to 3,943.15 points. In turn, the Nasdaq Technology Index fell 0.99% to 11,662.84 points.
Walmart shares continued to drop 8.03%, followed by Target which lost 3.47%. “It’s no surprise, it’s common for this to happen when inflation is rising,” Eugenio J. Aleman, chief economist at Raymond James, told Reuters. “People reduce their purchases based on their needs,” he added.
Among the major market moves, Amazon addresses are down 3.46%, after the company led by Andy Gacy announced that it would raise prices for delivery and streaming services in Europe by up to 43% this year to deal with rising costs. Price increases begin in September.
During the session, investors’ eyes are still focused on the US Federal Reserve’s two-day monetary policy meeting that begins on Tuesday. According to Bloomberg, the central bank led by Jerome Powell is expected to raise the federal funds rate by 75 basis points to a range between 2.25% and 2.5%.
The US central bank started its key interest rate hike cycle last March, with an increase of 25 basis points. At the next meeting, in May, it rose 50 basis points, and in June the rise was already 75 basis points for a range between 1.5% and 1.75%, where it is currently.
Analysts, citing the US agency, believe that in addition to this increase, the Fed will avoid giving too much detail about the next steps to be taken regarding its monetary policy – which in English it is called “future guidance” – in order to keep all options open, Based on economic data to be known until the next meeting in September.
“We expect the Fed to keep all options open and avoid any stronger guidance,” Goldman Sachs analysts wrote last week in a research note cited by Bloomberg.
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