Stock Market Open: US Stocks Lower As FOMC Mulls Interest Rates

Stocks headed lower at the open Tuesday as investors awaited word on what the Federal Reserve would do about interest rates and concerns over Saudi oil output in the wake of a weekend drone strike that cut its production capacity in half.

In early afternoon trading, the Dow Jones Industrial Average was off more than 50 points or 0.18%, the Nasdaq Composite was flat, off 0.02%, and the S&P 500 gave up 0.07%.

The Fed’s Federal Open Markets Committee begins its two-day meeting Tuesday with the interest rate announcement set for Wednesday. With rates currently at 2% to 2.25%, President Trump has been pushing for a drastic cut, but the FOMC is expected to cut just 25 basis points, its second cut in as many months, to try to cushion the U.S. economy from a slowdown resulting from the trade war with China and weak growth abroad.

Chairman Jerome Powell said in recent weeks he sees no signs of a recession on the immediate horizon and the Fed would proceed cautiously and in the bests interests of the economy, refusing to buckle to political pressure. Trump has said the Fed governors are a bunch of “boneheads” and demanded interest rates be cut to zero or less.

The Saudis are still investigating the weekend drone strike that seriously damaged the Aramco facility at Abqaiq. Houthi rebels have claimed responsibility for the strike that destroyed 5% of the world’s production capacity. A Saudi colonel said Monday the weapons were Iranian in origin and satellite pictures indicated the strike came from the north, where Iran is located, not the south, where Yemen is located.

Trump said it’s likely Iran was responsible, but any reaction would await a full investigation.

In other news, WeWork postponed its planned initial public offering as valuations plummeted but still expects it to be completed by the end of the year, Bloomberg reported.

Nearly 50,000 United Autoworkers were in the second day of their strike at General Motors (GM). Negotiators said they still are far apart on a pattern contract for the industry.

On international markets, stocks were mixed. Hong Kong’s Heng Seng closed off 1.23%, Japan’s Nikkei 225 gained 0.6% and China’s Shanghai Composite was off 1.74%. Australia’s S&P/ASX added 0.33%.

London’s FTSE 100 closed flat, off 0.01%, the German DAX lost 0.06% and the French CAC gained 0.24%. The British pound was up 0.56% against the dollar while the euro gained 0.56% and the dollar index was off 0.36%.

Oil futures were off following Monday’s runup. Crude oil futures were off 4.2% and Brent crude was off 4.29%. Gold and silver were higher.