US stocks have fallen as investors pause ahead of a Federal Reserve meeting that could offer views on the recent signs of economic recovery that drove the tech-heavy Nasdaq to an all-time high in the previous session.

The S&P 1500 airlines index declined 8.5 per cent, while cruise operators Carnival and Norwegian Cruise Line fell between 10 per cent and 12 per cent after climbing on Monday.

The Nasdaq became the first of Wall Street’s main indexes to confirm it entered a bull market two-and-a-half months earlier, as a rally in US stocks accelerated last week after strikingly upbeat May jobs data strengthened views the worst of the economic fallout from the pandemic was over.

The benchmark S&P 500 is about five per cent below its own all-time high on Tuesday, having climbed nearly 46 per cent since its pandemic low on March 23.

Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas, said the dip was not unusual.

“Because the S&P 500 has risen so far, so fast, you can always anticipate periodic short bouts of profit-taking to occur along the way,” he said.

“Markets may be moving based on where the economy will be a year from now versus, say, six months from now.”

While no major policy announcements are expected when the US central bank wraps up its two-day meeting on Wednesday, investors will look for hints that the US central bank believes the worst part of the coronavirus crisis has passed.

The benchmark US yield curve — an indicator of economic expansion — has widened to its steepest level since March as US data improved.

Investors will also keep an eye on whether the Fed will step in to flatten the yield curve.

At 9.52am local time on Tuesday, the Dow Jones Industrial Average was down 362.63 points, or 1.32 per cent, at 27,209.81, the S&P 500 was down 33.47 points, or 1.04 per cent, at 3,198.92. The Nasdaq Composite was down 32.98 points, or 0.33 per cent, at 9,891.77.

All 11 S&P sectors were in the red with financials weighing the most.

In a bright spot, Macy’s jumped four per cent after the department store chain said its 450 reopened stores were performing better than expected.

Tiffany & Co edged 2.3 per cent higher as the luxury jeweller said it had amended certain of its debt agreements in order to have sufficient liquidity to navigate the virus outbreak as it posted a 43 per cent slump in quarterly sales.

Declining issues outnumbered advancers for a 5.30-to-1 ratio on the NYSE and a 2.87-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 21 new highs and no new low.

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