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Wall Street retrenches and awaits Fed while oil surges

Economy Jun 15, 2021 05:17PM ET
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2/2 © Reuters. FILE PHOTO: A woman holding an umbrella walks near an electric board showing Nikkei index at a brokerage in Tokyo, Japan February 15, 2021. REUTERS/Kim Kyung-Hoon 2/2

By Pete Schroeder

WASHINGTON (Reuters) -Investors retrenched and avoided major risks across multiple markets on Tuesday as markets awaited fresh guidance from the U.S. Federal Reserve on Wednesday.

Wall Street took a step back on Tuesday, with all three major indices dropping after two posted record highs on Monday. U.S. Treasuries held steady, as did the U.S. dollar, with little activity ahead of the Fed policy statement.

The continued relaxation of pandemic restrictions helped drive oil prices higher on growing demand as vaccinated people begin to travel more freely.

Investors appeared reluctant to take on major new risks following a pair of disappointing economic data reports on Tuesday morning. One found retail sales shrinking more than expected in May, as consumers shifted their spending to service industries as pandemic restrictions ease. The second saw producers reporting higher price increases as they scramble to keep up with growing demand, exacerbating concerns about inflation.

"Supply constraints and surging demand seem to weigh heavy on companies. So while PPI is signaling that inflation is creeping up, keep in mind there are unique circumstances related to our economic comeback that are putting pressure on these numbers," said Mike Loewengart, managing director of investment strategy at E*Trade Financial (NASDAQ:ETFC). "Since hitting its new high yesterday, the market was in a bit of a holding pattern today with the Fed decision on deck tomorrow."

The readings loomed large ahead of the Wednesday statement. The central bank is not expected to announce any plans to ease back on its bond purchases until August, but investors are looking for any indication the Fed has begun discussing such an exit. Fed officials have said they view current price increases as transitory while the economy recovers.

Nearly 60% of economists in a Reuters poll expect a taper announcement will come in the next quarter, despite a patchy recovery in the job market.

The MSCI world equity index, which tracks shares in 45 nations, fell 0.85 points or 0.12%.

The Dow Jones Industrial Average fell 94.42 points, or 0.27%, the S&P 500 lost 8.56 points, or 0.20%, and the Nasdaq Composite dropped 101.29 points, or 0.71%.

OIL JUMPS

Oil prices saw their highest levels since 2019 on Tuesday on the expected surge in demand.

Brent crude was up $1.30, or 1.78%, at $74.16 a barrel. U.S. crude was last up $1.41, or 1.99%, at $72.29 per barrel.

In currency markets, the dollar was muted against other currencies. The dollar index, which measures the greenback against a basket of six currencies, was 0.02% higher at 90.511, after rising as high as 90.677 earlier in the day, its highest level since May 14.

Spot gold prices fell $7.7966, or 0.42%, to $1,858.20 an ounce, while U.S. gold futures were down 0.31% at $1,860.30. [GOL/]

Benchmark 10-year yields were 1.499%, slightly lower than Monday, when they rebounded from Friday's three-month low.

(Reporting Pete Schroeder in Washington; Editing by Kim Coghill, Alex Richardson, Barbara Lewis, Peter Graff and Sonya Hepinstall)

Wall Street retrenches and awaits Fed while oil surges
 

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Comments (7)
Notvery Goodathis
Peteymcletey Jun 15, 2021 6:04PM ET
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Russia is making billions off of Biden policies. say one thing, do another
Hassnain Mangi
Hassnain Mangi Jun 15, 2021 5:33PM ET
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Tre Hsi
Tre Hsi Jun 15, 2021 11:29AM ET
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remember when president orange wanted a negative interest rate?
Hassnain Mangi
Hassnain Mangi Jun 15, 2021 11:29AM ET
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Small Trader
Small Trader Jun 15, 2021 11:29AM ET
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President Senile is much worse.
Jouni Matero
Jouni Jun 15, 2021 8:26AM ET
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FED has no guts to raise rates, too many of their billionaire buddies would lost tons of money. You know when they are gonna raise the rates, there will be many days of low downhill before that because billionaires are warned before hand and they start the sell off before retailers know rates are gonna be raise. Always advantage for rich ones.
Godfirst Amaka
Godfirst Amaka Jun 15, 2021 8:26AM ET
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A Smart statement you have their before covid-19 on February Zuckerberg sold his holding i was wandering y he would do that the next thing boom covid-19 comes
Thi Tran
Thi Tran Jun 15, 2021 8:26AM ET
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Well the FED rather tapers down on bond buying instead of raising interest rate. With the national debt is at the record high, a higher interest will increase the debt significantly. The rate is going to be higher when the labor force regains strenght and they will be able to pay off some of the debt.
cedric vil
Ced971 Jun 15, 2021 5:58AM ET
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Pump it before the dump on Wednesday !
NUNO LOUREIRO
NUNO LOUREIRO Jun 15, 2021 5:52AM ET
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This is the stock market putting pressure on the FED, if they talk about tapering we are gonna see a big fall, and FED doesn't want that to happen so soon
Joel Schwartz
Joel Schwartz Jun 15, 2021 1:46AM ET
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RAISE THE RATES, POWELL. Grow a spine and stop talking about 2.5% targeted inflation targets when data shows double that every report we get.
 
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