US stocks fall after retail sales; Fed meeting in focus

US stocks fell Tuesday, as investors digested strong retail sales ahead of the start of the last Federal Reserve meeting of the year.  

At 09:35 ET (14:35 GMT), the Dow Jones Industrial Average fell 205 points, or 0.5%, the S&P 500 index dropped 30 points, or 0.5%, and the NASDAQ Composite slipped 110 points, or 0.5%.  

Major tech stocks extended their recent rally on Monday, driving the Nasdaq Composite to record highs. But the Dow lagged, recording its eighth consecutive losing session, the longest run since June 2018.  Fed decision in focus; retail sales grow strongly 

The central bank is widely expected to cut interest rates by 25 basis points at the conclusion of a two-day meeting on Wednesday.

While a rate cut appears to be largely priced in by markets, especially considering recent gains in Wall Street, focus will be chiefly on the central bank’s outlook on rates.

Investors are bracing for the Fed to signal a slower pace of easing in 2025 amid growing signs of sticky inflation and strength in the labor market- two major points of contention for the Fed.

Adding to the expectations of a cautious Fed in 2025, retail sales rose by 0.7% in November, above the 0.6% forecast, underscores that the US economy is still growing at a healthy pace even with higher interest rates.

Goldman Sachs analysts said in a recent note that they no longer expect a rate cut in January, and that the bank will cut rates by a slightly slower pace in the coming year. 

Traders were seen pricing in a 81.9% chance the Fed will leave rates unchanged in January, CME Fedwatch showed.  Tech sector remains in focus 

The tech sector is likely to remain in focus Tuesday, with the prospect of lower rates in the near-term boosting heavyweight stocks, such as Apple (NASDAQ:AAPL ), Amazon (NASDAQ:AMZN ) and Alphabet (NASDAQ:GOOGL ).

However, Nvidia (NASDAQ:NVDA ) has been bucking the trend, with the chipmaker's stock down over 10% from its highs, entering correction territory. 

Elsewhere, crypto-focused stocks continued to rally, including Coinbase Global (NASDAQ:COIN ) and MicroStrategy (NASDAQ:MSTR ), as bitcoin surpassed $107,000. 

Pfizer (NYSE:PFE ) stock rose 3.3% after the drugmaker said it was expecting its 2025 profits to be nearly in line with expectations, with the company reining in costs and cutting debt by shedding non-core businesses as its rebuilds itself post a sharp slump in sales of COVID-19 products. Crude slips ahead of Fed meeting 

Crude prices fell Tuesday, weighed by a bout of profit-taking ahead of the latest Federal Reserve policy meeting. 

By 09:35 ET, the US crude futures (WTI) dropped 1.9% to $69.36 a barrel, while the Brent contract fell 1.3% to $72.90 a barrel.

Crude prices are falling from the multi-week highs seen last week, with Monday’s weak retail sales  data out of China prompting profit-taking as investors fretted about the health of the second largest economy in the world.

Traders have also moved into a holding pattern ahead of the Fed's meeting, reluctant to hold significant positions ahead of this potentially market-moving event.

(Ambar Warrick contributed to this article.)

Source: Investing.com