NEW YORK — Investors are holding off making big moves while they wait for the Federal Reserve.
Stocks ended little changed Tuesday, a day after the major indexes had their worst day in two months. Traders are looking for the central bank at its two-day meeting ending today to outline its expectations for the economy and signal when it might raise interest rates.
Investors reacted coolly to a report from the National Association of Realtors that May sales of existing homes rose 2.4 percent. The increase was smaller than economists’ forecast of 2.8 percent and not enough to alleviate anxiety about reports later in the week on durable-goods orders, new-home sales and personal spending.
“There’s not a lot of conviction on behalf of buyers,” said Jim Herrick, manager of equity trading at Baird & Co.
The Fed is widely expected to keep its key interest rate near zero, but investors are unsure how optimistic the policymakers will be in the economic assessment that accompanies their rate decision, and whether the central bank will consider raising rates later this year to curb inflation.
Analysts say the Fed might dismantle some of the emergency supports it has put in place for the economy, a move that could make investors nervous. At its meeting in March, the Fed introduced $1.2 trillion in spending that included the purchase of $300 billion in government debt to help drive down interest rates. Rates fell but have since come off their lows, leaving traders divided about whether policymakers will change their strategy.
Meanwhile, the market was following the week’s $104 billion in Treasury auctions. The government sold $40 billion in debt Tuesday amid strong demand. Investors have been on edge during such auctions because any signs that a desire for government debt is waning could hit the market.
The Dow fell 16.10, or 0.2 percent, Tuesday to 8,322.91. The Standard & Poor’s 500 index rose 2.06, or 0.2 percent, to 895.10, and the Nasdaq composite index fell 1.27, or 0.1 percent, to 1,764.92.
The Dow has fallen six out of the past seven days and closed at its lowest level since May 27.
While stocks have been pulling back for weeks, their retreat has been accompanied by very little volatility, and that’s a positive sign, said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York.
“The fact is, you can’t keep going straight up,” he said.
“There’s a chance we’ll still see some downward movement in the next week or two — the market really needs a correction.”
