NEW YORK — Wall Street turned in a mixed performance Tuesday as investors traded cautiously ahead of the Federal Reserve’s decision today on interest rates.
The Fed, facing a faltering economy but also rising inflation, is expected to cut interest rates by another quarter point after its two-day meeting concludes. Many investors believe policymakers will then signal that they plan to hold rates steady for a while.
Consumers have been worried about inflation because it means energy and grocery bills are harder to pay. Wall Street also is concerned because inflation tends to curtail consumer spending, which accounts for more than two- thirds of the U.S. economy.
The Conference Board said Tuesday its April index of consumer confidence fell for the fourth straight month because of disappointment about soaring prices and a weakening job market.
“There’s no panic out there (in the market) because of the consumer-confidence numbers, but there is more concern about inflation than we had just a few weeks ago,” said Jim Herrick, director of equity trading at Baird & Co. “Everyone is interested in what the Fed will do about it.”
The Dow Jones industrial average fell 39.81, 0.31 percent, to 12,831.94.
The biggest drag on the Dow was Merck & Co., which sank $4.30, 10.4 percent, to $37.14 after the Food and Drug Administration refused to approve a new cholesterol drug called Cordaptive.
Broader markets were mixed. The Standard & Poor’s 500 index dipped 5.43, 0.39 percent, to 1,390.94, and the Nasdaq composite index rose 1.70, 0.07 percent, to 2,426.10.
A pullback in oil prices Tuesday eased inflationary concerns a bit and helped keep the stock market from tumbling sharply. Light, sweet crude for June delivery fell $3.12 to $115.63 a barrel on the New York Mercantile Exchange.
But some analysts say the market has been deceptively calm in recent weeks given the weakness of the economy and how consumers are struggling with not only slumping housing and job markets but also high prices.
“So far, investors have bought into the notion that the Federal Reserve has staved off a wider calamity, when in fact what they’ve done is allow the financial system to stay afloat as they work down, write down, a tremendous amount of bad debt,” said Joseph Battipag lia, chief investment officer at Ryan Beck & Co.
Slashing the key rate by more than half since last summer has not trickled down to consumers’ borrowing rates, he noted, and instead has “punted the dollar.”
“It’s sparked commodity runs,” he said. “It has translated to spikes in food and energy costs for the public at exactly the wrong time.”
Bond prices were little changed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was at 3.82 percent, down from 3.83 late Monday.
The Russell 2000 index of smaller companies fell 6.44, or 1.89 percent, to 718.93.
