Updated 2 min read
US stocks pulled back from records on Tuesday as the Federal Reserve kicked off its September policy meeting.
The benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) fell around 0.1% and 0.15%, respectively, while the Dow Jones Industrial Average (^DJI) dipped nearly 0.3%.
In an otherwise light week on economic data, investors received the latest figures on retail sales on Tuesday showing strong consumer spending despite sticky inflation and a wobbly labor market. Retail sales in August rose 0.6% from the prior month, more than the 0.2% expected.
In other news, the Senate narrowly confirmed Stephen Miran, President Trump’s Fed pick, in a 48-47 vote on Monday evening — a day before the central bank’s policy meeting kicks off Tuesday. The move has put Miran in place just in time to cast a crucial vote on the direction of interest rates.
Though Miran has said he would act independently, his intention to take a leave of absence — but not resign — from his current role as a White House advisor has raised questions about the future of Fed independence, especially as Trump pursues firing Fed governor Lisa Cook.
On Monday, the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) climbed to new record highs. US-China trade talks and anticipation Fed officials will announce a rate cut at its next meeting boosted sentiment.
Tesla (TSLA) stock rose 2% on Tuesday after wiping out its year-to-date losses on Monday following CEO Elon Musk purchased shares in the EV maker for the first time since 2020.
Oracle (ORCL) added to Monday’s gains as CBS News reported that the company was among a consortium of firms included in a US-China TikTok deal. Trump and Chinese President Xi Jinping are expected to finalize the deal and discuss trade on Friday.
But the main event of the week lands Wednesday when the Fed will announce its decision on rates. Markets are confident policymakers will cut rates due to a slowdown in the labor market, despite persistently sticky price increases. Traders currently see a 96% chance of a 25 basis-point cut and a 4% chance of a jumbo reduction.
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