U.S. stocks closed lower as investors wait for the outcome on Wednesday of the Federal Reserve’s two-day policy meeting and any trade deal news.
The odds for a rate cut are less than 3%, according the CME’s FedWatch tool that measure the market’s expectations for monetary policy decisions. However, investors will be keen to hear how the Fed’s sizing up President Donald Trump‘s tariffs and their effect on inflation and the economy. Most economists expect tariffs to push up prices and slow the economy.
Investors hope the Trump administration will avoid the stiffest penalties by negotiating deals with countries to lower costs. Several members of the administration have recently said that trade deals are forthcoming, maybe even some this week, but none have been announced.
Meanwhile, Trump’s ongoing and conflicting tariff comments continue to keep investors guessing. Late Monday, Trump threatened pharmaceutical tariffs in the next two weeks. Those comments came after he said he would tax foreign-produced movies 100%.
Trump met with Canadian Prime Minister Mark Carney on Tuesday to talk tariffs, and he said he will be making a “big announcement” before he departs on his trip to the Middle East next week. Trump didn’t say what his announcement would be about.
He also said the United States-Mexico-Canada Agreement is “very effective,” and he doesn’t know if it’s necessary to renegotiate the trade deal anymore. Trump also seemed to backpedal from trade deals, saying he will set tariff rates and doesn’t need deals. That contrasts with comments from Treasury Secretary Scott Bessent who said on Monday trade deals were coming soon.
The Financial Times reported the UK and the U.S. are set to sign a deal this week to lower tariff quotas for cars and steel.
The blue-chip Dow slid 0.95%, or 389.83 points, to 40,829, the broad S&P 500 dropped 0.77%, or 43.47 points, to 5,606.91; and the tech-heavy Nasdaq fell 0.87%, or 154.58 points, to 17,689.66. The benchmark 10-year Treasury yield slippped to 4.306%.
The trade deficit widened to a record high of $140.5 billion in March, but most economists had expected that as businesses stocked up ahead of tariffs. They expect that to reverse somewhat in coming months.
In contrast to the U.S., the UK has ruled out the possibility of having a strategic bitcoin or crypto reserve.
Instead, the UK is considering uses for blockchain technology. It’s currently seeking a provider to issue sovereign debt via distributed ledger technology, with the contract due to be signed in the late summer, according to Decrypt.
Bitcoin was last up 0.14% at $94,961.03.
This story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.