By Liz Moyer
Investing.com -- U.S. stocks ended lower as everyone awaits the end of the Federal Reserve's two-day meeting on Wednesday, when it will reveal its decision on interest rates and provide a glimpse of what may be to come this summer.
The Fed was signaling a half-point increase but in recent days the expectation has been rising that it will act even more aggressively, and raise its benchmark rate by three-quarters of one point as it tries to tame inflation.
The stock market has been pressured by the build-up to Wednesday's rate announcement, but increasingly it seems investors are factoring in a higher increase in rates with expectations for more to come, though possibly not at the same amount.
What's pushing the Fed to act is inflationary pressure that has been higher and lasted longer than expected. Consumers are facing rising prices for food and fuel -- gasoline prices are above $5 a gallon nationally -- and have been changing their shopping habits, forcing some retailers to slash prices to move inventory.
The retail sales data for May will also come out on Wednesday, providing more information for investors to gauge how long lasting this shift in behavior will be.
Signs of a slowdown are already arriving in the housing market, where existing home sales are projected to fall this year because of rising mortgage rates and soaring prices for homes that have put some would-be home buyers off to the sidelines until the market cools.
Here are three things that could affect markets tomorrow:
1. Fed decision
The FOMC decision will be announced at 2:00 PM ET followed by a press conference by Chair Jerome Powell. He is likely to face questions about the future pace of rate hikes, assuming the Fed does as expected and raises rates by at least a half-point. Analysts will be paying close attention to the data the Fed releases that shows what other policymakers are thinking in terms of the pace of tightening this year.
2. Retail sales
Data on retail sales for May is expected out at 8:30 AM ET. Analysts expect a monthly increase of 0.2% from April, compared with April's 0.9% climb.
3. Housing index
The NAHB Housing Market Index, which shows the level of current and future home sales, is due out at 10:00 AM ET. The expected reading for June is 68, down slightly from 69 in May.