Wall Street stocks retreat, eyes on US Fed meeting

Global equity markets retreated for a second straight session on Tuesday as investors were cautious ahead of earnings from Apple and a US Federal Reserve policy statement, while crude prices slumped to multi-week lows on growing oversupply concerns.

The S&P 500 closed lower as investors awaited Apple earnings after the closing bell in an effort to gauge global demand. Investors were also bracing for the conclusion of the Fed’s two-day meeting on Wednesday for signs on the timing of an interest rate hike.

“It’s an incredibly busy week, with the Fed tomorrow followed by GDP on Thursday. We are right in the heart of earnings and the market has just run 10 per cent uninterrupted,” said Patrick Schaffer, global investment specialist at JP Morgan Private Bank in Los Angeles.

“So ahead of a bellwether reporting tonight, why buy it?”

Prior to declines this week, the benchmark index had rallied more than 10 per cent from the end of September.

European shares fell following a profit warning from BASF . The world’s largest chemicals firm blamed struggling emerging markets like China and Brazil.

The Dow Jones industrial average fell 41.62 points, or 0.24 per cent, to 17,581.43, the S&P 500 lost 5.29 points, or 0.26 per cent, to 2,065.89 and the Nasdaq Composite dropped 4.56 points, or 0.09 per cent, to 5,030.15.

MSCI’s all-country world index of the equity performance of 46 countries lost 0.57 per cent, its second straight decline, while the pan-regional FTSEurofirst 300 index, tracking Europe’s 300 largest companies, closed down 1 per cent.

Markets are pricing in only around a 7 per cent chance the US central bank will raise rates this week and many market participants believe the Fed will hold off until 2016, but investors will be watching for signals the central bank might act at its next meeting in December.

Apple dipped 0.6 per cent to $114.55 ahead of its results, with investors anxious to hear how many new phones it has been selling after supplier Manz cut its guidance.

Alibaba shares climbed 4 per cent to $79.44 after the China-focused e-commerce giant reported better-than-expected revenue.

But BASF, whose products range from car coatings to mining acids, blamed the pressures facing major emerging markets like China and Brazil for the profit warning that knocked its shares 5 per cent lower.

Prices of 10-year Treasuries were up 8/32 to yield 2.0317 per cent after a drop in durable goods orders for September was the latest data point to indicate the economy slowed in the third quarter.

Oil prices fell for a third straight day, with Brent touching a six-week low, as worries over persistent oversupply grew ahead of US data that was expected to show another increase in crude inventories. Brent crude settled down 1.5 per cent to US$46.81 a barrel while US crude settled 2.8 per cent lower at $43.20.

Against a basket of currencies, the dollar was up 0.06 per cent at 96.915. The greenback had briefly dipped into negative territory after a private gauge of U.S. consumer confidence unexpectedly fell in October.