US stocks edged lower on Tuesday as investors locked in profits before a pivotal Federal Reserve decision on interest rates. The S&P 500 slipped 0.13% to 6,606.76, having touched a fresh record earlier in the day. The Nasdaq Composite eased 0.07% to close at 22,333.96, while the Dow Jones Industrial Average lost 125 points, or 0.27%, to finish at 45,757.90. Tech leaders that have fuelled the bull market were under pressure, with Nvidia down 1.6% and Microsoft off 1.2%. Alphabet and Palantir also declined.
Fed expected to cut rates
The Fed’s two-day meeting, which began Tuesday, is widely expected to deliver the first rate cut since December. Futures markets are pricing in a 100% chance of at least a quarter-point move, according to the CME’s FedWatch tool. But what matters most to investors is the outlook, whether policymakers signal one or two additional cuts before the end of 2025.
Traders will also parse remarks from Chair Jerome Powell, with political tensions adding to the backdrop. The Senate has confirmed President Donald Trump’s nominee Stephen Miran to the Fed, while the president is seeking to remove Governor Lisa Cook, who is voting at this week’s meeting.
Trade talks and TikTok agreement
Markets are also following US–China trade developments. Officials wrapped up two days of talks in Madrid with what sources described as a “framework” deal to allow TikTok to keep operating in the US, with Oracle among the companies set to play a role. That news lifted Oracle’s shares 1.5%.
Treasury Secretary Scott Bessent said China now senses that a trade deal is possible ahead of reciprocal tariffs due in November. President Trump echoed that optimism, helping US stocks rally on Monday and pushing the S&P 500 above 6,600 for the first time.
Australian outlook
Australian shares are tipped to open lower, with SPI futures pointing down 40 points, or 0.5%, to 8,832. The expected Fed decision, due at 4am AEST Thursday, remains the key driver. Economists at Citigroup noted that while markets have increasingly priced in further cuts, conditions still point to a soft landing.
Today’s local agenda includes a fireside chat with RBA assistant governor Brad Jones at the Intersekt 2025 Conference in Melbourne. Overseas, investors will watch UK and Eurozone inflation data, New Zealand consumer confidence, US housing starts, and a Bank of Canada rate decision.
