U.S. stocks saw a slight decline on Tuesday as investors awaited a pivotal decision from the Federal Reserve regarding interest rates. The Standard & Poor’s 500 index ended the day down 0.1% from its latest all-time high, while the Dow Jones Industrial Average fell by 0.3% and the Nasdaq composite dipped 0.1% from its previous record set just a day earlier.
This retracement comes as Wall Street anticipates a possible interest rate cut by the Fed, which many believe could serve as a stimulator for the slowing economy. The expected move is seen as necessary due to a deteriorating job market that traders now view as a more significant risk than inflation, exacerbated in part by President Trump’s trade tariffs.
Despite the Fed’s hesitance to cut rates amid inflation that has consistently exceeded its 2% target, recent consumer spending reports suggest a more resilient economy. Data released on Tuesday indicated that U.S. retail sales increased more than economists had predicted last month. However, analysts caution that this uptick might be partially attributed to rising prices rather than an increase in consumer demand. Still, the data suggests that household spending could help stave off a recession.
Investors remain optimistic, with expectations of cuts to interest rates not only on Wednesday but also continuing throughout the year and into 2026. While these expectations have propelled stock prices to record levels, they also leave room for disappointment if the Fed’s actions do not align with market hopes. Fed Chair Jerome Powell’s forthcoming press conference is expected to garner significant attention, particularly regarding future rate cut possibilities. Additionally, the central bank is set to release updated projections about interest rates and economic conditions, which could further influence market sentiment.
In other market movements, a survey by Bank of America indicates that global fund managers are favoring stocks to the highest extent in seven months. Interestingly, despite this optimistic outlook, a record 58% of participants expressed concerns that stocks may be overvalued at present.
On the individual stock front, Dave & Buster’s experienced a significant drop of 16.7% after reporting weaker-than-expected quarterly profits. New York Times Co. shares declined by 1.6% following the filing of a $15 billion defamation lawsuit against the newspaper by President Trump. This lawsuit highlights claims of intentional defamation leading up to the upcoming election.
Conversely, Steel Dynamics saw a 6.1% increase in its stock price after reporting improved earnings across its various business sectors, attributed to strong demand for steel from industries such as non-residential construction and automotive. Chipotle Mexican Grill gained 1.9% after announcing its intention to buy back an additional $500 million in stock, a move expected to benefit investors and enhance per-share results. Oracle’s stock rose by 1.5%, buoyed by speculation regarding a potential deal that would facilitate TikTok’s continued operation in the U.S.
Overall, the S&P 500 closed at 6,606.76, marking a decline of 8.52 points, while the Dow Jones Industrial Average ended at 45,757.90, down 125.55 points. The Nasdaq composite finished at 22,333.96, falling 14.79 points.
Internationally, European indexes retreated following a mixed performance in Asian markets. Japan’s Nikkei 225, however, recorded a 0.3% increase, reaching a new record despite prevailing political uncertainties surrounding Prime Minister Shigeru Ishiba’s decision to step down. An election for a new leader within the ruling Liberal Democratic Party is anticipated on October 4. In the bond market, the yield on the 10-year Treasury note relaxed to 4.03%, down from 4.05% late Monday.
