Dow Jones Industrial Average Lower As Investors Digest US Retail, Inflation Data Ahead Of Fed Rate Announcement

This story was updated at 4:25 p.m. EDT.

The Dow Jones Industrial Average eked out a slight gain Tuesday after spending much of the day lower ahead of the latest U.S. Federal Reserve monetary policy decision announcement. A raft of mixed U.S. economic data releases gave investors pause while oil prices extended losses for the second trading session of the week.

Economists polled by Thomson Reuters predict Fed Chair Janet Yellen will not announce a rate increase following the two-day Fed meeting that begins Tuesday, citing improved U.S. economic conditions in recent months.

“U.S. GDP tracking estimates have moved up, the unemployment rate has ticked down, core inflation has firmed, the U.S. dollar has sold off, and broader financial conditions have eased modestly," wrote Neil Dutta, head of economics at Renaissance Macro Research, in response to a CNBC survey of economists who see no rate hike this week.

The U.S. stock rally that kicked off the week appeared to wind down ahead of the Fed announcement. Official U.S. retail sales data for February released before markets open showed an expected 0.1 percent drop last month, but a sharper-than-expected downward revision for January.

Meanwhile, U.S. producer prices, or the cost of goods and services to businesses, fell 0.2 percent last month, more than expected. The producer-price index is the first measure of inflation for the month, though not as important as consumer prices.

On a more positive note, the March Empire State Manufacturing Survey, a key index tracking manufacturing in New York state, came in at positive 0.62, according to the Federal Reserve bank of New York.

“Overall retail sales were down, as expected given the big drop in gasoline prices over the month,” said Stuart Hoffman, chief economist for PNC Bank. ”There was also a big downward revision to sales in January. But sales excluding autos and gasoline have increased in nine of the past 10 months, and are up more than 4 percent over the past year.”

The U.S. stock rally that kicked off the week appeared to wind down ahead of the Fed announcement.

The Dow Jones Industrial Average (INDEXDJX:.DJI) closed up 22.40 points, or 0.13 percent, to 17,251.53. The broader Standard & Poor's 500 index (INDEXSP:.INX) shed 3.71 points, or 0.18 percent, to 2,016. The Nasdaq composite (INDEXNASDAQ:.IXIC) declined 21.61, or 0.45 percent, to 4,729.

Shares in Valeant Pharmaceuticals Intl Inc. (NYSE:VRX) were pummeled Tuesday after the company cut future earnings expectations amid an ongoing Securities and Exchange Commission investigation regarding the Canadian specialty drug maker’s accounting practices. The plunge dragged rivals down, including Horizon Pharma plc (NASDAQ:HZNP) and Mallinckrodt plc (NYSE:MNK).

“Global equity markets are reacting to weakness in commodities this morning as well as a couple of other, somewhat less easily identifiable variables,” Stephen Guilfoyle, head of New York Stock Exchange Floor Operations for Deep Value Execution Services, said in a Tuesday morning note.

These variables included the Bank of Japan’s decision to hold its deposit rate steady at minus 0.1 percent, a move that sent bank shares lower as investors fretted over the effect of the negative rate on bank earning.

Four out of the 10 S&P 500 edged up Tuesday, while healthcare and materials stocks led declines. Apple Inc. ( NASDAQ:AAPL ) led Dow advancers while Pfizer Inc. ( NYSE:PFE ) dropped the most.

Oil prices fell for a second day after OPEC said demand for its crude would be less than previously expected this year.

U.S. West Texas Intermediate (WTI) shed 1.99 percent to $36.44 per barrel for April delivery on the New York Mercantile Exchange. Brent crude, the other major global benchmark, fell 1.87 percent to $38.79 for May delivery on the London ICE Futures Exchange.

The benchmark U.S. 10-year Treasury settled at 1.97 percent Tuesday, close to its previous day’s settle price. The bond yield typically rises when investors are more confident about the markets and falls when concerns flare.

Gold, another so-called safe-harbor investment, fell 0.93 percent to $1,233.20 per troy ounce. Gold prices tend to rise as confidence in the markets falls. The price of the precious metal has gained about $100 since the start of the year.

Asian stocks lost ground after a recent rally.

China’s broad CSI 300 Index of the mainland’s largest companies closed up 0.30 percent to 3,075. Hong Kong’s Hang Seng lost 0.72 percent to 20,289. Japan’s Nikkei lost 0.68 percent to 17,117. Australia’s S&P/ASX 200 declined 1.43 percent to 5,111 while South Korea’s main Kospi Index edged down 0.12 percent to 1,970.

In Europe, the broad pan-European Stoxx Europe 600 index closed down 1.09 percent to 340.89. The Paris-based CAC 40 lost 0.75 percent to 4,473 while London’s FTSE declined 0.56 percent to 6,140 and Frankfurt’s DAX retreated 0.56 percent to 9,934.