After trending higher in recent sessions, stocks displayed a lack of direction throughout Tuesday's trading. The major averages fluctuated around the unchanged line before closing the day slightly lower.
The key indices ended the session off their worst levels but remained in negative territory. The Dow dipped 61.56 points, or 0.2%, to 40,834.97; the Nasdaq fell 59.83 points, or 0.3%, to 17,816.94; and the S&P 500 slipped 11.13 points, or 0.2%, to 5,597.12.
The modestly lower close may partly be attributed to profit-taking following the recent upward trend, which saw the Nasdaq and the S&P 500 rise for eight consecutive sessions.
Trading activity was relatively subdued as traders appeared hesitant to make significant moves ahead of key events later this week that could influence interest rate outlooks.
Traders are likely to scrutinize the minutes of the Federal Reserve's latest monetary policy meeting, set to be released on Wednesday, for further clues about the possibility of a rate cut next month.
Later in the week, remarks from Fed Chair Jerome Powell and other officials at the Jackson Hole Economic Symposium are also expected to attract attention.
According to CME Group's FedWatch Tool, there is a 73.5% chance of a quarter-point rate cut next month and a 26.5% chance of a half-point cut.
"September is being tipped as the month for that first Fed cut after inflation finally dropped below 3%," said Danni Hewson, AJ Bell’s head of financial analysis. "The key questions now are how far Jay Powell and the FOMC will go, how deep that first cut will be, and whether it might be the only cut this year."
She added, "Concerns that the Fed had been slow to act have been somewhat allayed, but every word at this week's Jackson Hole Symposium will be closely scrutinized."
### Sector News
Significant weakness in energy stocks weighed on the markets, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index plunging 3.4% and 2.8%, respectively. The weakness came as crude oil prices experienced further downside after sharp declines in the previous two sessions.
Considerable weakness was also visible among steel stocks, with the NYSE Arca Steel Index posting a 1.4% loss.
Semiconductor, natural gas, and brokerage stocks also saw notable declines, while networking stocks showed strong performance.
### Other Markets
In overseas trading, Asia-Pacific stock markets had a mixed performance on Tuesday. Japan's Nikkei 225 Index surged 1.8%, while China's Shanghai Composite Index slid 0.9%.
Major European markets moved down on the day. The U.K.'s FTSE 100 Index slumped 1.0%, Germany's DAX Index fell 0.4%, and France's CAC 40 Index dipped 0.2%.
In the bond market, treasuries continued their upward trend for the third consecutive session. The yield on the benchmark ten-year note, which moves inversely to its price, decreased by 4.9 basis points to 3.818%.
### Looking Ahead
Early trading on Wednesday may be subdued as investors await the afternoon release of the latest Fed meeting minutes.
