US stocks slipped from their record heights Tuesday as investors waited to hear whether the Federal Reserve will give any clue about when it may let up on its massive support for markets. The S&P 500 dipped 8.56, or 0.2%, to 4,246.59, as the Federal Reserve began a two-day meeting on interest-rate policy. A day earlier, the index returned to an all-time high amid optimism that ultralow interest rates pegged by the Fed, COVID-19 vaccinations and financial support from the government are revving up the economy, the AP reports. The Dow Jones Industrial Average lost 94.42 points, or 0.3%, to 34,299.33. The Nasdaq composite fell 101.29, or 0.7%, to 14,072.86. The S&P 500 was down as much as 0.4% earlier in the day, after a report showed inflation on the wholesale level leaped last month by even more than economists expected.
Prices for producers were 6.6% higher in May than a year earlier, the highest figure on record going back to 2010 and the latest evidence that inflation is bursting higher across the economy. The fear is that if higher inflation gets entrenched, it could force the Fed to pull back on the $120 billion in monthly purchases of bonds it's pledged to keep mortgages cheap and longer-term interest rates low, as well as raise short-term interest rates off their record low. The Fed has so far said that it sees higher inflation as being only temporary, and it will announce its latest decision on rate policy Wednesday afternoon. There are limited signs that inflation may be cooling in some parts of the economy. Lumber and copper prices have dropped from their highs a few weeks ago.
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