Stocks pulled back on Tuesday after Federal Reserve Chair Jerome Powell signaled that policymakers will move cautiously regarding further interest rate cuts. All three major averages closed at all-time highs on Monday, with the S&P 500 posting a three consecutive record closing highs.
The Dow Jones Industrial Average
Moving markets, Fed Chair Jerome Powell said in prepared remarks on Tuesday that there is "no risk-free path" forward for monetary policy as the economy presents "a challenging situation" for policymakers as they work to balance their goals of maximum employment and price stability.
"The US economy is showing resilience in the midst of substantial changes in trade and immigration policies, as well as in fiscal, regulatory and geopolitical arenas," Powell said in a speech in Rhode Island. "These policies are still emerging, and their longer-term implications will take some time to be seen."
On the economic front, the U.S. manufacturing and services sectors both grew at a less-than-expected rate in September, the S&P Global's U.S. Flash purchasing managers' index (PMI) showed on Tuesday. The manufacturing PMI came in at a reading of 52, below last month's reading of 53, while the services PMI was 53.9, falling from August's reading of 54.5. Still, readings above the neutral level of 50 signal expansion in a sector.
"PMI survey data are consistent with the economy expanding at a 2.2% annualized rate in the third quarter," wrote Chris Williamson, chief business economist at S&P Global Market Intelligence, in a statement. "However, the monthly profile is one of growth having slowed from its recent peak back in July, and September saw companies also pull back on their hiring."
"Although tariffs were again cited as a driver of higher input costs across both manufacturing and services, the number of companies able to hike selling prices to pass these costs on to customers has fallen, hinting at squeezed margins but boding will for inflation to moderate," Williamson added.
In the news, shares of Kenvue
"Taking Tylenol is not good," Trump said during Monday's press conference. "They are strongly recommending that women limit Tylenol use during pregnancy unless medically necessary. That's for instance, in cases of extremely high fever, that you feel you can't tough it out, you can't do it."
Kenvue said in a statement on Monday that "independent, sound science" demonstrates that taking Tylenol while pregnant is not linked to autism, adding that the company strongly disagrees with "any suggestion otherwise and are deeply concerned with the health risk this poses for expecting mothers."
Citi analysts wrote in a note on Monday that the firm sees "limited judicial risk" for the drugmaker following the White House's announced, but added that "there could be some impact on Tylenol consumption due to negative headlines."
Looking ahead, market participants are awaiting the latest reading of the personal consumer expenditures price index on Friday, which is expected to offer more clues on whether the stock market has more room to run as all three major averages trade near record highs. Investors are also monitoring the latest developments out of Washington D.C., as Congress works to pass legislature to stave off a government shutdown ahead of the Sept. 30 deadline.
Traders will also turn their attention toward earnings reports from companies including Micron Technology
