Wall Street’s main indexes have slipped ahead of the Federal Reserve’s policy meeting, with investors awaiting grocery delivery app Instacart’s Nasdaq debut to assess a potential recovery in the IPO market.
Instacart parent Maplebear Inc secured a fully diluted valuation of $US9.9 billion ($A15.3 billion) on Monday after its IPO was priced at $US30 per share, the top of its indicated price range.
Chip designer Arm Holdings had a stellar market debut last week, raising hopes of a revival in the initial public offering market after a near 18-month dry spell.
Arm and Instacart could drive others to go public, although it is still a difficult environment for IPOs with interest rates high and the economy slowing, said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield.
Arm fell 4.6 per cent after announcing its IPO had closed and that underwriters had exercised the full over-allotment option of 7 million American Depositary Shares.
The stock’s options began trading at a brisk pace on Monday, with many investors positioning for further downside.
A rise in US Treasury yields weighed on some growth stocks, with Amazon, Nvidia and Microsoft down between 0.5 per cent and 2.0 per cent.
Investors are also focused on the two-day Fed meeting during the day, with the US central bank expected to hold the benchmark interest rate at the current 5.25 per cent-5.50 per cent range on Wednesday.
Recent economic data has signalled that core inflation is crawling toward the Fed’s 2.0 per cent target although crude prices gaining for three consecutive weeks to around 10-month highs remains a concern.
Further piling on price pressures, Canada’s annual inflation rate in August jumped in July as petrol prices rose.
Economic data has largely indicated that the US economy remains resilient, boosting the hopes for a soft landing and allaying concerns of a possible recession.
US Treasury Secretary Janet Yellen told Reuters that a “soft-landing” scenario for the US economy can withstand near-term risks including a United Auto Workers strike and the threat of a government shutdown.
Traders have fully priced in a pause by the Fed on Wednesday, while chances of interest rates remaining unchanged in November stood at 74 per cent, according to CME’s FedWatch tool.
Investors will scrutinise the Fed’s quarterly report on economic projections, which will be released on Wednesday, to gauge participating members’ longer-term policy outlook.
In early trading, the Dow Jones Industrial Average was down 52.01 points, or 0.15 per cent, at 34,572.29, the S&P 500 was down 8.83 points, or 0.20 per cent, at 4,444.70, and the Nasdaq Composite was down 56.78 points, or 0.41 per cent, at 13,653.46.
Starbucks lost 1.7 per cent after TD Cowen downgraded the coffee chain to “underperform”.
The consumer discretionary sector housing the stock lost 1.0 per cent and was among the top S&P 500 sectoral decliners.
CVS Health Corp gained 1.9 per cent after Evercore ISI upgraded the US pharmacy chain to “outperform” from “in line”.
Walt Disney lost 2.5 per cent as it nearly doubled its capital expenditure for the parks business to about $60 billion over the next 10 years.
Advancing issues outnumbered decliners by a 1.40-to-1 ratio on the NYSE.
Declining issues outnumbered advancers by a 1.08-to-1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs and four new lows while the Nasdaq recorded 14 new highs and 103 new lows.
