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US STOCKS-S&P 500 ends lower as investors eye Fed meeting

· 03/16/2021 16:00
US STOCKS-S&P 500 ends lower as investors eye Fed meeting

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Energy and industrials lose ground

Retail sales drop more than expected in Feb

Updates to close of trading

By Noel Randewich

- The S&P 500 ended lower on Tuesday as investors awaited the result of the Federal Reserve's two-day policy meeting.

The U.S. stock market lacked direction for much of the day after the S&P 500 and Dow Jones Industrial Average closed at record highs in the prior session as optimism about a $1.9 trillion fiscal stimulus package and ongoing vaccination drives bolstered views that the economy was on a path to recovery.

At the same time, fears about an overheating economy and a recent increase in interest rates have increased scrutiny on the Fed's two-day meeting, where policymakers are likely to raise economic forecasts and repeat their pledge to remain accommodative for the foreseeable future. nL1N2L82OT

Apple Inc AAPL.O rose after Evercore ISI hiked its price target on the iPhone maker's shares to the highest among analysts covering the company, according to Refinitiv data.

Wall Street's fear gauge .VIX hit a five-week low at 19.68 points. A midafternoon rise in the 10-year Treasury yield US10YT=RR to 1.62% nipped some enthusiasm for high-growth stocks. The benchmark U.S. 10-year Treasury hit a 13-month high last week.

Investors have slightly increased their cash allocation, deeming that inflation and "taper tantrums" could topple the record rally in financial markets, BofA's March fund manager survey showed on Tuesday. nL8N2LE2K2

"This Fed meeting is one of the most important ones for the market in a long time. It is the first we have had after the recent inflation rate rise and concerns about inflation," said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

Data showed retail sales dropped more than expected in February due to bitterly cold weather across the country. Another report indicated winter storms in Texas led to a plunge in U.S. factory output last month. nL1N2LD1V6 nL1N2LD290

Unofficially, the Dow Jones Industrial Average .DJI fell 128.3 points, or 0.39%, to 32,825.16, the S&P 500 .SPX lost 6.37 points, or 0.16%, to 3,962.57 and the Nasdaq Composite .IXIC added 11.86 points, or 0.09%, to 13,471.57.

The S&P 500 energy index .SPNY tumbled after a drop in oil prices while financials .SPNY and industrials .SPLRCI also retreated. The communication services .SPLRCL and technology .SPLRCT indexes both rose.

The Russell growth index .RLG rose, while the Russell value index .RLV fell in a slight reversal of a recent trend away from technology and other high-growth stocks.

Ford Motor Co F.N dropped after announcing a $2 billion convertible debt deal. nL1N2LE0TZ


(Reporting by Noel Randewich in San Francisco and Medha Singh and Shashank Nayar in Bengaluru
Editing by Maju Samuel and Matthew Lewis)

((noel.randewich@tr.com
+1 (415) 677 2542
Twitter: @randewich))