Wall Street Near Record Highs Amid Rate Cut Hopes/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stock markets hovered near record highs Tuesday, buoyed by investor optimism that the Federal Reserve will begin cutting interest rates. Traders are banking on recent labor data signaling a cooling job market. Meanwhile, corporate moves and global political shifts added more nuance to the day’s trading.
Wall Street Record Watch Quick Looks
- S&P 500 and Nasdaq flirt with new record highs.
- Dow Jones up 32 points in early trading.
- Investor focus locked on possible Fed interest rate cuts.
- Job market data expected to influence Fed decision.
- UnitedHealth shares jump after affirming profit outlook.
- Fox Corp drops 5.3% amid Murdoch succession deal.
- Nebius stock skyrockets 43.9% on major Microsoft deal.
- Apple slides 0.3% ahead of iPhone announcement.
- France’s CAC 40 steady despite government shakeup.
- Japan’s Nikkei dips amid Prime Minister’s resignation.
Deep Look: Wall Street Hovers Near Records as Fed Rate Cut Hopes Lift Market
NEW YORK — Wall Street continued to trade near all-time highs on Tuesday as investors held firm in their belief that the Federal Reserve will soon cut interest rates, a move seen as critical for sustaining economic growth and keeping stock valuations lofty.
The S&P 500 edged up 0.1%, sitting just shy of the record it set last week. The Dow Jones Industrial Average climbed 32 points, or 0.1%, while the Nasdaq Composite rose 0.2%, also coming off a fresh high. These modest gains reflect cautious optimism, as markets await critical economic data and monetary policy direction.
Markets Bet on Fed Rate Cuts
The main driver behind the market’s upward drift remains the expectation that the Fed will lower interest rates at its next policy meeting. A series of recent economic reports, particularly those showing slower job growth, have bolstered the case for a shift in policy.
Investors are interpreting the cooling labor market as a signal that the risk of inflation resurging is lower than before, despite inflationary pressures from ongoing tariff hikes under President Donald Trump’s administration. If the labor market shows signs of sustained softness without tipping into recession territory, the Fed may prioritize economic support through lower rates.
The next data point in this narrative was due Tuesday morning, when the U.S. government planned to release preliminary revisions to hiring data through March. These revisions could either reinforce market optimism or cast new doubt on the Fed’s next move.
The Balancing Act: Not Too Hot, Not Too Cold
Wall Street is betting on a “Goldilocks” scenario: a labor market that’s slowing just enough to justify rate cuts without indicating an imminent recession. Inflation, meanwhile, needs to remain within striking distance of the Fed’s 2% target.
While inflation has cooled from the highs of 2022 and 2023, it remains stubbornly above target. That’s creating tension between the need for economic stimulus and the Fed’s inflation-fighting mandate. Market sentiment has priced in at least one rate cut this year, with more expected in early 2026 if conditions allow.
Corporate Movers: UnitedHealth, Fox, Apple, and Nebius
UnitedHealth Group surged 2.9% after reaffirming its 2025 profit guidance, helping it recover some of the steep losses it’s suffered this year — down 36.7% coming into the day. Insurers, including UnitedHealth, have struggled amid rising medical costs, but investor confidence was buoyed by management’s forward outlook.
Fox Corporation fell 5.3% following the announcement that the Murdoch family has finalized a succession plan for control of the media empire. Rupert Murdoch’s chosen successor, Lachlan Murdoch, will share control with his sisters, but no changes are expected at Fox News, a network widely viewed as a conservative powerhouse.
Meanwhile, Apple shares slipped 0.3% ahead of the highly anticipated release of the next iPhone. Apple continues to face headwinds from a volatile global trade environment, where new tariffs threaten to increase consumer prices on flagship products.
One of the day’s most dramatic moves came from Nebius Group, a Dutch company in the AI infrastructure sector. Shares soared 43.9% after it announced a multi-billion-dollar contract with Microsoft, potentially valued between $17.4 billion and $19.4 billion, and set to run through 2031. Microsoft shares also rose 0.6% on the news.
Global Markets Reflect Political Volatility
France’s CAC 40 index gained 0.2%, showing resilience despite a major political shakeup in Paris. Lawmakers voted to remove yet another prime minister, casting uncertainty over the country’s fiscal strategy. Still, markets seemed to take the development in stride, perhaps reassured that France remains committed to broader EU economic targets.
In Asia, Japan’s Nikkei 225 fell 0.4%, erasing early gains. Investor sentiment there was shaken after Prime Minister Shigeru Ishiba announced plans to resign over the weekend. Political instability may linger in Tokyo as the country awaits a new leader, which could take weeks to decide.
Bond Market Signals Steady Rates — For Now
In the bond market, the 10-year U.S. Treasury yield held firm at 4.05%, the same level as late Monday. That stability reflects both cautious optimism and market patience as traders wait for the Fed’s final decision next week.
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