Dow set to open lower as traders get nervous ahead of Fed decision

The Dow is set to open lower on Tuesday, as investors are getting jittery ahead of the Federal Reserve’s interest rate decision.

Futures for the Dow are down 0.4%, while those for the S&P 500 and the Nasdaq Composite are down 0.4% and 0.7%, respectively.

The Fed’s two-day monetary policy meeting kicks off Tuesday morning and culminates in its interest rate decision at 2 pm ET Wednesday.

The central bank is expected to cut rates by a quarter percentage point. That has been expected and priced in for weeks. The market reaction could be much more driven by the forward guidance and language from Fed Chairman Jerome Powell. Market participants will be watching for clues whether there will be more rate cuts in the future, perhaps as early as September.

On Friday, the US Labor Department will release its July jobs report. If it comes in better-than-expected, just like GDP data last week, expectations for a September rate cut could slip. Stocks could drop in lockstep, as lower interest rates are good for companies.

Because the Fed has been a main driver of the recent stock rally, the central bank’s rate decision is overshadowing everything else this week.

US and Chinese trade representatives are meeting in Shanghai starting today, though the market doesn’t have high hopes for the outcome. President Donald Trump tweeted earlier that China was doing “very badly” and wasn’t buying the US agricultural products it promised to buy.

“That is the problem with China, they just don’t come through,” he wrote.