Stocks fall, Fed action in focus

Stocks fell on Tuesday, with the S&P 500 falling 0.7 percent.

“The large cap names are now starting to fall by the wayside, which is exactly what happened in 2018, the last time we had sort of that rolling correction idea,” said Morgan Stanley chief investment officer Mike Wilson.

The Federal Reserve kicked off its two-day meeting on Tuesday. With US producer prices rising 9.6 percent in November from the previous year, the largest yearly increase on record, investors are concerned that the Fed could remove monetary stimulus at an accelerated pace.

“If Fed Chair Powell emphasizes that the FOMC remains flexible, the ‘Fed put’ should remain in place. However, if his tone is overly hawkish, it could turn into a disaster like December 2018,” said Wolfe Research strategist Chris Senyek.

Meanwhile, news on the Omicron variant of the COVID-19 virus remained worrisome.

“Omicron is spreading at a rate we have not seen with any previous variant,” said WHO Director-General Tedros Adhanom Ghebreyesus on Tuesday. “Even if omicron does cause less severe disease, the sheer number of cases could once again overwhelm unprepared health systems.”