Stocks dropped ahead of the Fed’s rate decision – US Market Wrap

The S&P 500 and Nasdaq 100 fell 0.4%. The Dow Jones Industrial Average experienced its longest losing streak since 1978. The 10-year Treasury yield was hardly changed at 4.40%.

Previously, data showed that US retail sales climbed at a strong rate in November, demonstrating consumer resilience. While the report did not appear to impact expectations for the Fed to drop interest rates this week, Ian Lyngen of BMO Capital Markets believes the central bank will prepare the market for a pause early next year. Industrial production statistics was also released on Tuesday, showing an unexpected decline for the third consecutive month in November.

Traders are now looking ahead to the Fed’s final rate decision of the year, which is scheduled on Wednesday. A quarter-point drop is widely anticipated, but what happens in the next months is less certain. While the US economy remains resilient, the potential of inflationary import tariffs suggested by Donald Trump’s incoming administration may cause Fed officials to reconsider the speed of future moves.

Bank of America CEO Brian Moynihan noted on Bloomberg TV that he sees the Fed lowering interest rates to the 3.75% level, or three more cuts from where they are now.