[New York Stock Market] All Fall Ahead of FOMC... Nasdaq Down 1.56%

All three major U.S. stock indices closed lower on the 15th (local time) ahead of next week's Federal Reserve (Fed) Federal Open Market Committee (FOMC) regular meeting.

At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 288.87 points (0.83%) from the previous session to close at 34,618.24.

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The large-cap S&P 500 index dropped 54.78 points (1.22%) to 4,450.32, while the tech-heavy Nasdaq index declined 217.72 points (1.56%) to close at 13,708.33.

This week, the Dow rose 0.12%, but the S&P 500 and Nasdaq fell 0.16% and 0.39%, respectively, marking two consecutive weeks of decline.

It was a "triple witching day," when stock index futures, stock index options, and single stock options expired simultaneously, resulting in relatively high market volatility.

All 11 sectors in the S&P 500 declined. Technology, consumer discretionary, energy, communication services, and materials stocks all fell more than 1%, leading the weakness. Shares of British semiconductor design company Arm, which had a highly successful initial public offering (IPO) the previous day, dropped more than 4%. Adobe reported earnings that beat expectations but saw its stock fall over 4%.

With the United Auto Workers (UAW) union initiating a partial strike, auto-related stocks showed mixed performance. GM shares rose 0.9%, Ford closed slightly lower, and Stellantis shares increased more than 2%.

Investors are closely watching inflation trends, rising oil prices, and next week's Fed FOMC meeting.

Following the August Consumer Price Index (CPI), the Producer Price Index (PPI) also showed strength. The August import price index released that day rose 0.5% from the previous month, marking the largest increase since May last year.

Energy prices surged, pushing U.S. import prices higher. Energy import prices rose 6.7% from the previous month. Excluding energy prices, import prices in August fell 0.1%.

Most other economic indicators also exceeded expectations. U.S. industrial production increased 0.4% from the previous month, slowing from the 0.7% rise recorded the prior month but beating the market's expected 0.2% increase. The New York manufacturing index jumped to 1.9 in August from -19.0 in July, indicating a return to expansion.

However, the University of Michigan consumer sentiment index came in at 67.7, below July's 69.5 and the market forecast of 69.2. The one-year expected inflation rate for September was 3.1%, the lowest since January 2021. The five-year expected inflation rate was 2.7%, down from 3.0% the previous month.

Nevertheless, concerns are emerging that inflationary pressures could persist longer due to recent strength in oil prices. West Texas Intermediate (WTI) crude oil prices surpassed $91 per barrel, and Brent crude exceeded $94 per barrel, the highest levels since November last year. WTI closed slightly higher at $90.77 per barrel.

Bank of America analysts forecast that if oil-producing countries continue to cut production, Brent crude could exceed $100 per barrel before the end of the year. JP Morgan expects oil prices to fluctuate between $80 and $100 per barrel in the short term.

Investors expect the Fed to keep the benchmark interest rate unchanged at the September FOMC meeting next week but are watching closely for any hints about future meetings.

Mona Mahajan, senior investment strategist at Edward Jones, told CNBC, "Core inflation still seems to be moving in the right direction," adding, "The Fed tends to focus on core inflation, and historically, it tends to pay more attention to it, which is positive."

Greg Basak of AXS Investments said, "There was initial investor excitement that inflation did not rebound as much as expected," but added, "On the other hand, inflation indicators were hotter than predicted, but investors ignored this because the Fed is not expected to raise rates again next week." He further noted, "Investors appear to be taking a step back and catching their breath amid geopolitical pressures and ongoing economic data."

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market showed a 99.0% probability that the Fed will hold rates steady at the September meeting.

The probability of holding rates steady through the November meeting was 73.1%, while the chance of a 0.25 percentage point rate hike was 26.7%, revised from the previous day's 63% and 35.7%, respectively.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose 0.97 points (7.57%) to 13.79.