Wall Street set for mostly flat start as Fed meets

Wall Street is set for a flat open on Tuesday morning as the Federal Reserve begins its two-day meeting to discuss the latest economic situation. And most crucially, whether the central bank needs to act amid signs of inflationary pressures. Sophie Griffiths, market analyst at Oanda, said: "There is only one show in town this week, and that's the Fed. Investors want to know if the Fed has started to talk about reining in its ultra-loose policy or not. The markets want to know whether the sugar rush that has boosted stocks to all-time highs is coming to an end. "The Fed is unlikely to hurry into a decision now. However, with bond yields at three-month lows and equities at record highs, the Fed has the market where it wants it. As such, there's a good runway for very gradually introducing the debate surrounding tapering asset purchases. Even if it doesn't happen tomorrow, it could well happen at the Jackson Hole economic forum later in the summer." Ahead of all that, the Dow Jones Industrial Average is expected to open virtually unchanged (down a minuscule 0.02%) while the S&P 500 is forecast to edge up 0.07% and the tech-heavy Nasdaq Composite is indicated to add 0.12%. As the Fed meets, investors will also be able to see the latest US retail sales and producer price figures. Retail sales have been on a rollercoaster ride in recent months, with a fall of 2.7% in February, a 10.7% surge in March, then a flat figure in April. The May figure due later is forecast to slip 0.7%. Michael Hewson at CMC Markets said: "While the US is doing well on the vaccine rollout plans and the reopening of the economy, with theme and holiday parks also reopening, there still seems to be an overriding feeling of caution around consumer spending patterns which appears to be tempering retail sales. Higher fuel prices probably aren’t helping with an expectation of a decline of -0.7% expected. "With inflation at multi year highs today’s PPI numbers for May could also offer a further glimpse into the inflationary impulse of the US economy. Often a leading indicator of future CPI numbers they have already proved to be reasonably accurate so far. "Today’s headline PPI is expected to stay at 6.2%, however core prices are expected to rise further from 4.1% to 4.8%, which would be additional food for thought for the members of the [Federal Reserve} when they sit down and start their deliberations later today." Four things to watch for on Tuesday: Companies in the earnings diary today include software firm Oracle Corp (NYSE:ORCL), tax specialist H&R Block Inc (NYSE:HRB) and investment firm StepStone Group Inc (NASDAQ:STEP) Shares in Boeing Co (NYSE:BA) will likely be in focus amid reports the EU and the US are on the cusp of resolving a 17-year long dispute over state aid to aircraft manufacturers Amazon Inc 9NASDAQ:AMZN) could also draw attention following reports an investigation into its business by Indian competition authorities is due to be expedited On the macro front, aside from the Fed meeting and US sales figures, there will also be production data and housing market readings to populate the diary