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S&P 500 dips amid investor anticipation of Federal Reserve's policy outcome

The S&P 500 index has been experiencing a downturn throughout September 2023, despite an overall upward trend in U.S. stocks this year. On Tuesday, the index was down by 0.3%, trading around 4,441, according to Bespoke Investment Group.

The S&P 500 is currently at the bottom of its bullish trading channel and is trailing behind its 50-day moving average of nearly 4,484. This has heightened investor scrutiny on the outcome of the Federal Reserve's two-day policy meeting set to conclude today, Wednesday.

Historically, this period, beginning from September 18, is known as the "weakest 10-day period of the year" for the S&P 500, as per BofA Global Research's report on Tuesday. Within this month, the index has dropped by 1.5%, but it still boasts gains exceeding 15% year to date as of Tuesday afternoon, based on data from FactSet.

Bespoke Investment Group noted an increasing number of stocks across various sectors either breaking down or failing at crucial resistance levels. This trend is predominantly evident in sectors such as consumer staples and healthcare.

However, not all sectors are facing a slump. The energy and financial sectors have shown considerable strength, especially insurance stocks within the financial sector. Despite the overall drop in the S&P 500 this month, its energy sector has risen by over 3%, largely due to a surge in oil prices, as per FactSet data.

In August, these elevated oil prices contributed to a rise in inflation with the consumer-price index increasing by 0.6% for an annual rate of 3.7%, up from a 3.2% pace through July.

The market now awaits Fed Chair Jerome Powell's press conference following the conclusion of the Federal Reserve's policy meeting today. Investors will be keen to decipher any indications about the duration for which the Fed plans to maintain high interest rates in its attempt to pull inflation back to its 2% target.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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