U.S. Stocks Slip From Records Ahead of Fed's Expected Rate Cut
S&P 500 edges down as investors await the Federal Reserve's Wednesday decision; Treasury yields dip after retail sales report.
U.S. stocks drifted a bit below their record highs Tuesday as investors awaited the Federal Reserve’s widely expected first interest-rate cut of the year.
The S&P 500 slipped 0.1% to 6,606.76, coming off its latest all-time high. The Dow Jones Industrial Average fell 125.55 points, or 0.3%, to 45,757.90. The Nasdaq composite declined 14.79 points, or 0.1%, to 22,333.96. The Russell 2000 index of smaller companies eased 2.10 points, or 0.1%, to 2,403.03.
Treasury yields softened modestly after the latest retail sales report showed stronger consumer spending, but the data did little to change market expectations that the Fed will begin cutting rates on Wednesday and likely pursue several reductions through the remainder of 2025 and into 2026. Investors have pushed stock benchmarks to fresh highs in recent weeks on the view that lower borrowing costs will help support growth as the job market cools.
For the week, the S&P 500 was up 22.47 points, or 0.3%, while the Nasdaq gained 192.86 points, or 0.9%. The Dow was down 76.32 points, or 0.2%, and the Russell 2000 was up 5.97 points, or 0.2% for the week.
Year to date, the S&P 500 has risen 725.13 points, or 12.3%. The Nasdaq is up 3,023.17 points, or 15.7%. The Dow has advanced 3,213.68 points, or 7.6%, and the Russell 2000 is higher by 172.87 points, or 7.8%.
Market participants have focused on signs of a cooling labor market and incoming inflation data as the Federal Open Market Committee approaches its September meeting. A slowing job market has been cited by economists as a reason policymakers might move to ease policy, but officials have maintained that decisions will be data-dependent.
Analysts said the retail sales gain showed consumers remained willing to spend in August, yet the report did not materially alter the consensus view that the Fed will start easing policy. Yields on benchmark Treasuries moved lower after the report, reflecting persistent expectations for rate cuts.
Trading volume was subdued as many investors awaited the Fed’s announcement and accompanying economic projections on Wednesday, which are expected to provide further direction for stocks, bonds and the dollar in the weeks ahead.