US stocks posted a mild decline in light trading on Tuesday, with investors bracing for the hotly anticipated Federal Reserve decision.
The S&P 500 fell 0.3 per cent to 2,365.4, the Nasdaq Composite dipped by the same margin to 5,856.5 and the Dow Jones Industrial Average shed 0.2 per cent to 20,837.4.
The energy sector faced the heaviest selling, falling 1 per cent on the back of a 1.1 per cent fall in the price of US crude oil. Industrials and materials also posted solid declines.
But trading across the New York Stock Exchange markets was light on the day, coming in roughly 13 per cent below the 30-day average, according to Bloomberg data. The tepid activity came as a winter storm struck Wall Street and other parts of the US East Coast.
Investors were also cautious to make bets ahead of the Fed’s policy decision, due on Wednesday afternoon in Washington. Economists broadly expect the central bank to raise its benchmark lending rate for the third time since the end of the financial crisis amid rising confidence over the US economic outlook.
However, there is more debate over how many times the Fed will raise rates this year. Central bankers had projected three rate rises when they met in December, but some investment houses are now toying with the spectre of four increases.
Federal funds futures pinned the odds of at least four rate increases at about 25 per cent, Bloomberg calculations show.
In fixed income, the yield on the benchmark 10-year Treasury note was little changed at 2.6 per cent. The two-year yield was up almost 1 basis point to 1.38 per cent.