Stocks closed mixed on Tuesday as investors looked ahead towards key inflation data due out later this week that will give more clues on the Federal Reserve's next steps. The Dow Jones Industrial Average inched up slightly higher, while the S&P 500 Index and Nasdaq Composite slipped 0.6% and 1%, respectively.
Here's how the market settled on Tuesday:
S&P 500 Index (NYSE: SPY): -0.65% or -23.55 points to 3,588.84
Dow Jones Industrial Average (NYSE: DIA): +0.12% or +36.31 points to 29,239.19
Nasdaq Composite Index (NASDAQ: QQQ): -1.10% or -115.91 points to 10,426.19
Driving market moves on Tuesday, the Bank of England reportedly told pension fund managers ath that central bank will conclude its emergency bound market support program by Friday, Reuters reports, calling on them to rebalance their positions by then.
Market participants are also on edge this week as the third-quarter earnings report season begins this week, which includes reports from JPMorgan (NYSE: JPM), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) and Morgan Stanley (NYSE: MS), as well as the government's Consumer Price Index (CPI) reading for September slated for release on Thursday.
Investors expect Thursday's reading will show inflation remained high despite hawkish interventions made by the central bank to stabilize prices. Fuelling fears, JPM analysts warned in a note Tuesday that if September's reading comes in hotter than August's print of 8.3%, the S&P 500 could fall as much as 5%.
The path of the Fed's rate hiking campaign will ultimately determine whether or not the U.S. economy will fall into a recession in the near-term. However, some analysts already believe its not if the economy will experience a recession, but when and how severe.
On Monday, JPM CEO Jamie Dimon told CNBC that the U.S. would likely slide into a recession over the next "six to nine months," adding that the S&P 500 could plunge another 20% depending on how the Fed tackles inflation.
Elsewhere, shares of Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) dropped on Tuesday after the U.S. Labor Department proposed a new rule that could reclassify gig-economy workers as employees rather than independent contractors.