Stocks closed lower Tuesday as uncertainty around the Federal Reserve's future policy plans kept market participants on edge.
Rising oil prices did little to lift investor sentiment, either, with worries percolating about higher energy costs keeping inflation – and interest rates – higher for longer.
The Federal Reserve kicked off its two-day policy meeting today, with a decision and press conference from Fed Chair Jerome Powell slated for tomorrow afternoon. It's all but guaranteed that the central bank will keep interest rates unchanged this time around. The uncertainty, however, surrounds what it will do next.
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"The futures market projects that this would be the last hike of the cycle followed by a series of cuts beginning next spring," says John Lynch, chief investment officer for Comerica Wealth Management. "We are not convinced that will be the case and suspect the Fed is prepared to keep rates elevated beyond the consensus forecast horizon to combat energy prices and persistent core inflation."
Indeed, oil spent most of Tuesday in positive territory, though U.S. crude futures eventually settled down 0.3% at $91.20 per barrel. Still, oil prices are up more than 34% since their mid-June low near $68 per barrel, and based on last week's Consumer Price Index (CPI) data, the rising prices are throwing a wrench in the disinflationary trends we saw earlier this year.
Instacart stock pops in trading debut
Meanwhile, Instacart's initial public offering (IPO) received resounding applause from the equity market. Maplebear (CART), the tech company that does business as online grocery delivery firm Instacart, last night priced its offering at $30 per share – the high end of its range – and opened today at $42. CART stock hit an intraday high of $42.95 before settling at $33.70.
However, David Trainer, CEO of New Constructs, a research firm powered by artificial intelligence, thinks investors should pass on the Instacart IPO. "It's true, Instacart has built a profitable business, but growth is slowing, competition is rising, and demand for this service remains shaky as people return to in-person shopping as the pandemic fades," Trainer says.
Instacart's successful start mirrors last week's blockbuster IPO from chipmaker Arm Holdings (ARM, -4.9%). Though ARM stock has pulled back in recent sessions, it is still holding above its IPO price of $51 per share, closing today at $55.17.
The red-hot IPO train continues tomorrow, with marketing automation platform Klaviyo set to start trading on the New York Stock Exchange under the ticker "KVYO."
As for the major indexes, the Nasdaq Composite fell 0.2% to 13,678, the S&P 500 gave back 0.2% to 4,444, and the Dow Jones Industrial Average shed 0.3% to 34,518.
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