Wall Street Pauses Ahead of Fed Rate Cut Decision

The U.S. stock market traded without clear direction on Tuesday as investors looked ahead to the Federal Reserve’s policy announcement. Both the Nasdaq and S&P 500 touched record highs earlier in the day but later pulled back, leaving the major indexes close to unchanged.

By afternoon trading:

•Nasdaq edged down 6.64 points to 22,342.11

•S&P 500 slipped 8.79 points to 6,606.49

•Dow Jones Industrial Average fell 169.14 points, or 0.4%, to 45,714.31

Traders Brace for Fed Outcome

Caution dominated as the Fed began its two-day meeting. Markets almost fully expect a quarter-point rate cut, with the CME FedWatch Tool showing a 96% chance. Only 4% of traders are pricing in a larger 50 bps cut.

Markets brace ahead of the Fed decision — rate cut expectations, economic signals, and what stocks are likely to do next.

Investors will also study the Fed’s statement, economic projections, and dot plot for signs of the central bank’s outlook. Analysts project another 25 bps cut in both October and December, but Fed Chair Jerome Powell is likely to stress that future moves depend on incoming data.

Strong Retail Sales Data

Economic reports showed unexpected strength. The Commerce Department revealed retail sales rose 0.6% in August, triple the 0.2% forecast. July’s growth was revised up to 0.6% as well. Despite the upbeat numbers, Wall Street reaction was muted, with focus locked on the Fed’s decision.

Sector Highlights

•Gold miners slumped as the NYSE Arca Gold Bugs Index dropped 1.6%, even as bullion prices ticked higher.

•Banking stocks weakened, with the KBW Bank Index down 1.2%.

•Energy stocks advanced, fueled by rising oil prices, lifting the NYSE Arca Oil Index 1.7%.

Global Market Moves

In Asia, stocks closed mostly higher: Japan’s Nikkei 225 and Australia’s ASX 200 gained 0.3% each, while China’s Shanghai Composite barely moved. In Europe, sentiment turned negative, with Germany’s DAX down 1.3% and both the FTSE 100 and CAC 40 off 0.8%.

Meanwhile, U.S. Treasuries stayed flat. The 10-year yield edged up less than a basis point to 4.036% as bond traders also awaited Powell’s remarks.

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