Wall Street set to fall as rally pauses ahead of Fed meeting

By Reuters On Jun 9, 2020

FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid

By Medha Singh and Devik Jain

(Reuters) – Wall Street’s main indexes were set open lower on Tuesday, a day after the Nasdaq surged to a record closing high on hopes of a quick economic recovery from a coronavirus-fueled downturn, with focus now on the Federal Reserve’s policy meeting.

Stocks in the travel industry, including American Airlines (NASDAQ:AAL) Group Inc, United Airlines Holdings (NASDAQ:UAL) Inc, Alaska Air (NYSE:ALK) Group Inc and Marriott International (NASDAQ:MAR) Inc, fell 4% to 7% in premarket trading after climbing on Monday.

The Nasdaq’s record close confirmed a bull market began when markets hit a low on March 23, while the S&P 500 erased its year-to-date losses. The benchmark index is about 5% below its all-time high, having climbed nearly 48% since the plunge in March.

A rally in U.S. stocks accelerated last week after a strikingly upbeat jobs data for May strengthened views that the worst of the economic fallout from the pandemic was over.

“Because the S&P 500 has risen so far so fast, you can always anticipate periodic short bouts of profit-taking to occur along the way,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin.

“Markets may be moving based on where the economy will be a year from now versus, say, six months from now.”

While no major policy announcements are expected when the U.S. central bank wraps up its meeting on Wednesday, investors will look for hints that the Fed believes the worst part of the coronavirus crisis has passed.

The benchmark U.S. yield curve — an indicator of economic expansion — has widened to its steepest level since March as U.S. data improved and investors will look for hints on whether the Fed will step in to flatten the yield curve.

At 8:34 a.m. ET, Dow e-minis were down 259 points, or 0.94%. S&P 500 e-minis were down 26.25 points, or 0.81% and Nasdaq 100 e-minis were down 35.25 points, or 0.36%.

In a bright spot, Macy’s Inc (NYSE:M) jumped 7.4% after the department store chain said its 450 reopened stores were performing better than expected, a day after it raised $4.5 billion in financing to combat the fallout from the pandemic.

Tiffany & Co edged 0.9% higher as the luxury jeweler said it had amended certain of its debt agreements in order to have sufficient liquidity to navigate the coronavirus outbreak as it posted a 43% slump in quarterly sales.