US close: Stocks end lower ahead of Fed meeting

US equities faltered on Tuesday, as data revealed that the manufacturing sector grew steadily ahead of the Federal Reserve’s meeting on Wednesday, when the central bank is expected to stand pat on interest rates.

Dow Jones I.A.

43,444.99

04:30 15/10/20

n/a

Nasdaq 100

20,394.13

12:15 15/11/24

-2.40%

-502.54

The Dow Jones Industrial Average fell 0.58% to 18,037.10 points, the S&P 500 declined 0.68% to 2,111.72 points and the Nasdaq 100 was also down 0.72% to 4,766.94 points.

Oil prices fell again after rebounding earlier in the session, from a 4% decline on Monday due to doubts over OPEC’s planned production cut to ease supply.

Brent crude was last down 1.48% to $47.90 per barrel and West Texas Intermediate crude lost 1.04% to $46.38 per barrel.

Philip Marey, senior US strategist at Rabobank, said: “Hiking only a week before the elections seems unlikely, therefore a December hike remains our baseline scenario.

"However, the decision to hike may not be unanimous, which could have a perverse effect on yield levels, especially at the longer end of the curve.”

The country’s manufacturing sector grew in October as the Institute of Supply Management’s index rose to 51.9 from 51.5 in September, above the 50 level that indicates an expansion. This was above analyst forecasts of 51.7.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: “After a decidedly mixed bag of regional reports, this is a decent result, confirming that the August drop in the index was a one-time fluke rather than the start of a weakening trend.

"Admittedly, the key new orders index dipped by three points to 52.1, and that will make it harder to keep the headline at its current level over the next few months, but strong import demand from China should prevent any further dip in orders, they seem more likely to rebound.”

In contrast US construction spending unexpectedly declined in September as it fell 0.4% to a seasonally-adjusted $1.15bn, missing economists’ expectations for a 0.5% increase.

On the year, construction spending was 0.2% lower.

Meanwhile, economic data from China was better-than-expected and sent Asian shares higher earlier.

The manufacturing purchasing managers’ index increased to 51.2 in October from 50.4 the month before, which was the highest level since July 2014, as the Caixin manufacturing PMI edged up to 51.2 from 50.1.

In corporate news, US shares in Royal Dutch Shell rose 4.74% as the oil behemoth exceeded expectations for third quarter earnings, but cautioned against an uncertain outlook due to weak oil prices.

Car maker Fiat Chrysler’s shares were down 1.09%, reversing earlier gains as it reported a 10% fall in sales year-on-year in October, although this was countered with strong truck sales.

Pfizer’s shares fell 2.21% as the pharmaceutical giant said its adjusted earnings per share for the third quarter just missed analyst’s expectations and cut 4% of its forecast for the year.

Dow Jones - Risers

Chevron Corp. (CVX) $106.48 1.65%
Merck & Co. Inc. (MRK) $59.30 0.99%
Exxon Mobil Corp. (XOM) $83.65 0.40%
Procter & Gamble Co. (PG) $86.85 0.06%
Boeing Co. (BA) $142.41 -0.01%
Goldman Sachs Group Inc. (GS) $178.06 -0.10%
United Technologies Corp. (UTX) $102.01 -0.19%
Microsoft Corp. (MSFT) $59.80 -0.20%
American Express Co. (AXP) $66.25 -0.26%
McDonald's Corp. (MCD) $112.25 -0.28%