Wall Street opens in red as investors gear up for Fed's policy decisions

  • Energy shares lead losses as oil continues to correct Monday's rally.
  • Markets expect the Fed to announce 25 basis points cut to the policy rate.
  • US President Trump says they will increase sanctions on Iran.

Major equity indexes in the United States started the day in the negative territory on Wednesday as investors seem to be booking their profits ahead of the Federal Reserve's policy announcements later in the day. As of writing, the Dow Jones Industrial Average was down 0.21% on the day while the S&P 500 and the Nasdaq Composite were erasing 0.3% and 0.18%, respectively.

Among the 11 major S&P 500 sectors, only the defensive Utilities and the Consumer Staples indexes are posting modest daily gains in the early trade. On the other hand, falling crude oil prices on easing concerns over supply disruptions seem to be weighing on energy shares for the second straight day. At the moment, the Energy Index is down 0.6% on the day.

Later in the session, the Federal Open Market Committee's September meeting is expected to yield a 25 basis points rate cut in the Federal Reserve's monetary policy. Investors, however, will be paying close attention to Chairman Powell's remarks on the policy outlook.

Previewing this event, “A rate cut is more or less priced in by the market so the words of Mr Powell and the outcome of the dot plot chart will likely be what determine market reactions," said Nordea Markets analysts.

"We expect a softer stance from the Fed, which should satisfy the fairly dovish market expectations going forward. In our view, it would be a massive hawkish surprise if the Fed were to leave rates unchanged.”

FOMC Preview: What 13 major banks are expecting from September meeting?

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