Stock market news live updates: Stocks drift ahead of Fed decision

Stocks struggled for direction on Wednesday as investors looked ahead to the Federal Reserve’s final monetary policy decision of 2021 and weighed the central bank’s potential response to persistent inflationary pressures. 

The S&P 500 were little changed The blue-chip index closed out Tuesday’s session in the red for a second straight session, with technology stocks leading the way lower. The Nasdaq ended the session down by more than 1%.  

All eyes on Wednesday will be on the Federal Reserve’s monetary policy statement and press conference by Federal Reserve Chair Jerome Powell. Many market participants expect these will set the stage for the Fed to speed the withdrawal of its crisis-era stimulus programs, with the firming economic recovery and soaring inflation suggesting the central bank has room for a more hawkish tilt to policy. Last week’s Consumer Price Index showed the fastest surge in U.S. consumer prices since 1982 on a year-over-year basis in November. And on Tuesday, the U.S. Producer Price Index jumped by the most on record at a 9.6% year-over-year increase for last month. 

Specifically, many investors anticipate the Fed will ramp up the rate of tapering of its asset-purchasing program, which took place at a rate of $120 billion per month in combined Treasuries and agency mortgage-backed securities from the start of the pandemic through November. Last month, the Fed began dialing back these purchases by $15 billion, and announced another $15 billion reduction for December. 

“We don’t think that the Fed is really going to have any surprises for the markets [Wednesday]. They’re probably going to announce that they’re going to … accelerate tapering, and that they’ll probably finish that by March. But we think that they’re going to leave themselves lots flexibility around raising interest rates,” Tracie McMillion, Wells Fargo Investment Institute head of global asset allocation strategy, told Yahoo Finance Live on Tuesday. She added she expects just one interest rate hike from the Federal Reserve in the second half of next year. 

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Other pundits, however, expect an earlier liftoff on interest rates, which maybe be reflected in the Federal Open Market Committee’s (FOMC) updated Summary of Economic Projections on Wednesday. 

“The announcement of faster tapering after today’s FOMC meeting is a done deal; we’d be astonished by anything other than a plan to complete asset purchases by the end of March at the latest,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note on Tuesday. He expects the Fed to stick to its prior plan of purchasing $90 billion in its asset-purchase program this month, before doubling the rate of tapering from its current $15 billion per month starting in January.

“That would mean purchases drop to $60 billion in January, $30 billion in February, and zero in March, leaving the door open to a rate hike that month if the inflation outlook has not improved, via a clear and sustained increase in the labor force participation rate,” he added. 

A number of strategists noted the trading activity in recent sessions and weeks has reflected the market pricing of a more hawkish Fed. Software and other growth names were some of the biggest laggards in the major indexes during Tuesday’s session. 

“When you have an anticipation of higher interest rates, growth stocks or long-duration growth stocks certainly get hit the hardest,” Art Hogan, national chief market strategist, told Yahoo Finance Live on Tuesday. “When you do that net present value calculation with a higher interest rate, that implied multiple or ascribed multiple to growth names comes in. So a lot of that’s been priced in. When you think about some of those real growth-y names and momentum names and risk assets, they’ve seen a lot of carnage.”

“What the market is trying to tell us here is that when you set your asset allocation plan for next year, you want to have a barbell approach with growth on one side — you want to have those growth names that are actually valued at a multiple to earnings, not a multiple to revenues or a multiple to cash flows or a multiple to sales,” he added. “We anticipate 2022 is going to be very much like 2021, where you really want to have a balance between growth and value.”

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9:30 a.m. ET: Stocks open flat 

Here’s where markets were trading as of 9:30 a.m. ET: 

• S&P 500 (^GSPC): +4.04 (+0.09%) to 4,638.13

• Dow (^DJI): +1.87 (+0.01%) to 35,546.05

• Nasdaq (^IXIC): -5.75 (-0.04%) to 15,919.00

• Crude (CL=F): -$0.54 (-0.76%) to $70.19 a barrel

• Gold (GC=F): -$1.60 (-0.09%) to $1,770.70 per ounce

• 10-year Treasury (^TNX): +3.8 bps to yield 1.467%

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8:30 a.m. ET: Retail sales rose 0.3% in November, missing estimates

U.S. retail sales rose at a slower-than-expected rate in November after a jump in October, as electronics and department store retailers’ sales especially dropped during the month. 

Retail sales were up 0.3% in November compared to October, the Commerce Department said on Wednesday. This came in below the 0.8% monthly increase consensus economists were expecting, according to Bloomberg-compiled data. In October, retail sales rose 1.8%, which was upwardly revised from the 1.7% increase previously expected. 

By category, department stores saw one of the biggest sales drops during the month with a decline of 5.4%. General merchandise store sales more broadly declined 1.2%. Electronics and appliance store sales fell by 4.6%, and health and personal care store sales were down 0.6%. 

“I see this more as a sign that Americans started their holiday shopping early, as opposed to bad news for retailers,” Ted Rossman, senior industry analyst at CreditCards.com, wrote in an email Wednesday morning. He noted that on a year-over-year basis, retail sales were still up 18.2%. 

“That year-over-year comparison is more significant, and it illustrates robust expansion,” he added. 

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7:26 a.m. ET Wednesday: Stock futures drift

Here’s where markets were trading ahead of the opening bell on Wednesday: 

• S&P 500 futures (ES=F): +0.25 points (+0.01%), to 4,637.25

• Dow futures (YM=F): +12 points (+0.03%), to 35,564.00

• Nasdaq futures (NQ=F): -11.5 points (-0.07%) to 15,913.25

• Crude (CL=F): -$0.87 (-1.23%) to $69.86 a barrel

• Gold (GC=F): -$2.00 (-0.11%) to $1,770.30 per ounce

• 10-year Treasury (^TNX): +0.9 bps to yield 1.448%

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6:24 p.m. ET Tuesday: Stock futures edge up ahead of Fed decision

Here were the main moves in markets as the overnight session kicked off on Tuesday: 

• S&P 500 futures (ES=F): +2.25 points (+0.05%), to 4,639.25

• Dow futures (YM=F): +25 points (+0.07%), to 35,577.00

• Nasdaq futures (NQ=F): +12.25 points (+0.08%) to 15,937.00

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter