U.S. stock erased early gains Tuesday and closed nearly flat, ending the Standard & Poor’s 500 index’s weeklong rally.
Banks accounted for much of the decline, along with utilities and industrial companies. Those losses offset gains by healthcare, technology and consumer products stocks.
The benchmark S&P 500 ended barely lower, its second loss over the last seven trading days. It’s still up 13% so far in 2019.
Investors were looking ahead to what the Federal Reserve will say Wednesday after a two-day meeting of policymakers. The central bank has signaled that it will be “patient” in raising interest rates.
Investors seem reassured that the Fed will continue to hold off on raising rates, and that has given them more confidence to push the market higher this year.
“Typically, markets tend to be flat in front of the Fed [announcement]. Usually we’re in a wait-and-see mode,” said Kate Warne, investment strategist at Edward Jones.
The S&P 500 index finished down 0.37 of a point at 2,832.57. The Dow Jones industrial average slipped 26.72 points, or 0.1%, to 25,887.38.
The Nasdaq composite edged up 9.47 points, or 0.1%, to 7,723.95. The Russell 2000 index of smaller-company stocks fell 8.95 points, or 0.6%, to 1,554.99.
The broader market broke out of a short slump last week and has been gaining since then. It marks a turnaround from December’s steep drop, and now every major U.S. index is up more than 10% for the year.
What the Fed does next will probably affect the market’s trajectory. The central bank is expected to leave its key short-term interest rate unchanged Wednesday and to emphasize its new watchword — “patient”— in conveying its intention to leave interest rates alone for the foreseeable future.
The Fed has made clear that with a dimmer economic picture in both the United States and globally, it no longer sees the need to keep raising rates as it did four times in 2018. Among the key factors are slower economic growth, President Trump’s trade war with China, continually low inflation levels and British Prime Minister Theresa May’s struggle to execute her nation’s exit from the European Union.
Signs of a modest economic slowdown, such as the weak factory-orders report on Tuesday, may help keep the Fed patient and on hold for longer, Warne said. “It’s a slightly ‘bad news is good news’ situation,” she said.
The absence of sharp bad news surprises has given investors confidence that there is less volatility than previously feared, she said.
Financial, utilities and industrial stocks weighed the most on the market Tuesday. Fifth Third Bancorp slid 3.3%, FirstEnergy slid 2%, and railroad operator Union Pacific lost 3.3%.
Companies that reported disappointing quarterly results also fell.
DSW dropped 12.9% after the footwear retailer surprised investors with a fourth-quarter loss. Expenses jumped during the quarter, and DSW had to deal with a hefty charge.
Tilray slid 3.4% after the medical cannabis company reported a wider fourth-quarter loss than Wall Street analysts expected.
Healthcare stocks, technology companies and retailers notched some of the biggest gains Tuesday.
DaVita led the health sector higher, climbing 3.5%. Cigna advanced 3.4%. Chipmakers posted solid gains, with Advanced Micro Devices jumping 11.8% and Nvidia climbing 4%. L Brands, the parent of retailers including Victoria's Secret and Bath & Body Works, rose 2.7%.
Michaels jumped 10%, with investors rewarding a better-than-expected fourth quarter and overlooking a weak forecast. The arts-and-crafts retailer has been reassessing its operations, moving to expand its children’s offerings and shutting its Pat Catan’s craft stores. The company changed leadership this month, with Chief Executive Chuck Rubin stepping down and longtime retail executive Mark Cosby taking over as interim CEO.
Bond prices fell. The yield on the 10-year Treasury rose to 2.62% from 2.60%.
The dollar held steady at 111.41 Japanese yen. The euro strengthened to $1.1352 from $1.1338.
Benchmark U.S. crude oil slipped 0.1% to settle at $59.03 a barrel. Brent crude rose 0.1% to $67.61 a barrel.
Wholesale gasoline climbed 0.5% to $1.89 a gallon. Heating oil rose 1.1% to $1.99 a gallon. Natural gas rose 0.8% to $2.87 per 1,000 cubic feet.