US STOCKS-Wall Street mixed as investors await interest rate cut

Wall Street was mixed on Tuesday as investors awaited a widely expected Fed interest rate cut on Wednesday, while the impact of weekend attacks on Saudi Arabia's biggest oil refinery faded. Equity markets took a hit on Monday after the attacks wiped out nearly half of Saudi Arabia's oil production, sending oil prices soaring and fuelling geopolitical tensions.

But investors were calmed after U.S. President Donald Trump said he did not want war and Reuters reported that Saudi Arabia was close to restoring 70% of its lost production. "People were thinking it would be months until we got that production back on line, and now it seems more like weeks. Putting that production back on line alleviates the risk of a higher disruption," said Keith Buchanan, a portfolio manager at GLOBALT Investments in Atlanta.

The S&P energy index dipped 1.6% after recording its strongest one-day surge since January on Monday. The so-called defensive consumer staples, utilities and real estate posted some of the biggest gains among the 11 major S&P sectors. Overall, six sectors rose and five fell.

The U.S. Federal Reserve concludes its two-day policy meeting on Wednesday, where the central bank is expected to lower interest rates by a quarter percentage point, the second rate reduction of the year. Investors will also wait for clues on how far the U.S. monetary policy easing would go, given that Fed policymakers are deeply divided on whether more rate cuts are warranted.

"Its going to be difficult for them to signal an extremely dovish tone, given they are already half divided at this point," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, in Charlotte, North Carolina. The S&P 500 bank index, which tends to underperform in a lower interest rate environment, fell 0.2%.

Economic reports were upbeat, as U.S. manufacturing output increased more than expected in August, while homebuilders' optimism grew unexpectedly brighter in September. At 2:30 pm ET, the Dow Jones Industrial Average was down 0.06% at 27,060.17 points, while the S&P 500 gained 0.01% to 2,998.34.

The Nasdaq Composite added 0.09% to 8,160.91. Among stocks, Chipotle Mexican Grill Inc jumped 3.2% as it added a new steak dish to its menu in the United States for the first time in three years.

Home Depot Inc dropped 0.7% after Guggenheim downgraded the home improvement chain's shares to "neutral" from "buy". Corning Inc tumbled 7.6% after the Gorilla glass maker cut its current-quarter display volume forecast.

Kraft Heinz Co tumbled 4.3% after the packaged food maker's second-largest investor, 3G Capital, sold over 25 million shares in open market at a discount. Advancing issues outnumbered declining ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.

The S&P 500 posted 15 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 49 new highs and 22 new lows. 

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