US stocks slipped on Tuesday, as Treasury yields fell and investors braced for the Federal Reserve’s upcoming policy decision.
At the opening bell, the S&P 500 (^GSPC) traded flat after Monday’s gain of 1.2%, while the Dow Jones Industrial Average (^DJI) fell around 0.2%. The tech-heavy Nasdaq Composite (^IXIC) fell nearly 0.3%.
Bonds rallied after the US Treasury cut its estimate of how much the government would need to borrow in the fourth quarter, easing some pressure on stocks. The 10-year Treasury yield (^TNX) slid to trade around 4.86%.
Fed policymakers have hinted that the recent surge in Treasury yields could be a factor in their decision making, given its tightening effect. Investors are highly focused on whether the central bank will hold interest rates steady, as most analysts expect, or hike at their meeting starting Tuesday. Their decision is due on Wednesday.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
Unusually, some stock investors are watching another event that day more closely: the US Treasury’s update on how much bond supply the government will put into the market next quarter. The focus is on what the release could imply for the direction of yields, and in turn for stocks.
This season, strong earnings have so far not proved enough to lift the stock market, and reports have been mixed. Pfizer (PFE) posted its first quarterly loss since 2019 before the bell on Tuesday, while Caterpillar (CAT) shares slipped after the machine maker’s report signaled a waning in demand.
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