The Spanish IBEX 35 stock index returned to negative territory on Tuesday and threatened the psychological level of 11,700 points, after a brief respite in the previous session, in a market reluctant to take new buying positions while awaiting the outcome of the U.S. central bank meeting.

The Federal Reserve (Fed) will conclude its meeting on Wednesday and markets are discounting a 25 basis point (bp) cut in interest rates. However, the focus will be on the Fed's economic and monetary forecasts, as well as on the statements of its chairman, Jerome Powell.

"(The Fed) will probably revise upwards its GDP and inflation estimates versus the previous ones in Sept. (...) and, consequently, the so-called 'dot plot' (chart in which advisors anonymously show their individual estimates on 2024/27 rates) will show fewer cuts in 2025, which in Sept. were -100bp, to 3.25/3.50%," Bankinter analysts said on their Telegram channel.

"We estimate that the Fed will cut to 3.50/3.75% and then we will see if anything more, which maybe nothing or even less than that. This will confirm our estimate that the Fed will lower less than what the market is discounting and that this will end up being passed on to the ECB in the same sense," they added.

The market also awaits with interest the US consumer deflator (also known as PCE), which will be released on Friday and may have some impact on the stock market as it is the Fed's favorite inflation barometer.

Meanwhile, confidence surveys from two major German institutes, the Ifo (0900 GMT) and the ZEW (1000 GMT), will be released on Tuesday.

Against this backdrop, at 0802 GMT on Tuesday, Spain's selective IBEX 35 stock market index was down 61.70 points, or 0.52%, to 11,716.90 points, while the FTSE Eurofirst 300 index of large European stocks was down 0.50%.

Before Monday, when it registered a slight rebound, the Spanish stock market had been down for six consecutive sessions, in a corrective movement favored by the significant advance registered so far this year - more than 16% to date - and encouraged by the moderation of hopes for rate cuts in the United States.

As regards individual stocks, in the banking sector, Santander lost 0.33%, BBVA barely changed, Caixabank gave up 0.19%, Sabadell fell 0.08%, Bankinter dropped 0.77%, and Unicaja Banco rose 0.24%.

Among the large non-financial stocks, Telefónica fell 1.62%, Inditex dropped 0.64%, Iberdrola lost 0.15%, Cellnex fell 0.63%, and the oil company Repsol lost 0.31%.

(Information by Tomás Cobos; edited by Benjamín Mejías Valencia)