Stocks finished lower Tuesday as the Federal Reserve began its two-day meeting, U.S. retail sales fell more than expected in May and producer prices climbed for the fifth month in a row.
The Dow Jones Industrial Average ended down 94 points, or 0.27%, to 34,299, the S&P 500 declined 0.2% and the Nasdaq tumbled 0.71%.
The yield on the benchmark 10-year Treasury note declined Tuesday to 1.497%. Oil prices in the U.S. rose above $72 a barrel, the highest since 2018.
Investors are watching the Federal Reserve's policy-setting meeting that kicked off Tuesday. The central bank on Wednesday will make an announcement on interest rates, followed by a news conference with Fed Chairman Jerome Powell.
The Fed isn't expected to take any action with respect to rates or a tapering of its $120 billion of monthly asset purchases. But Wall Street will be monitoring the meeting closely for the Fed's forecasts on inflation and any hints on when the central bank might begin pulling back on monetary stimulus.
"The key component to watch at Wednesday's press conference is an acknowledgement by Fed Chair Powell that the tapering discussion is underway and that officials are pondering a timeframe as to when they will communicate to the markets that the tapering train is scheduled to depart the station," said Danielle DiMartino Booth, chief executive and chief strategist of Quill Intelligence.
Economists surveyed by Bloomberg expect the Federal Reserve to affirm the pace of bond purchases this week, even if it delivers projections for higher rates in 2023.
Bank of America's closely watched survey of global fund managers, meanwhile, noted that 72% of those polled in this month's edition said inflation likely was transitory, echoing the Fed's belief.
Retail sales in May fell 1.3%, more than forecasts that called for a decline of 0.8%, as the impact of stimulus from the American Rescue Act continued to fade and prices rose at the fastest pace in more than 10 years.
The Labor Department said Tuesday that producer prices, a measure that tracks what businesses charge their customers, rose 0.8% in May from April. Prices at the wholesale level rose 6.6% year over year.
Both the S&P 500 and Nasdaq closed at records on Monday as Wall Street prepared for the Fed meeting and shares of tech giants led equities higher.
Boeing (BA) - Get Report shares finished 0.6% higher at $246.70 after the U.S. and the European Union agreed to extend a tariff truce for five years that puts aside a dispute over aircraft subsidies.