Wall Street Steady Ahead of Fed Rate Decision/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks held mostly flat Tuesday as Wall Street awaited the Federal Reserve’s decision on interest rates. CVS Health surged on strong projections, while Toll Brothers and AutoZone dropped on weak earnings. All eyes are on whether the Fed signals more rate cuts ahead.
Wall Street Awaits Fed Move: Quick Looks
- S&P 500 stayed flat Tuesday morning; Dow rose 145 points.
- Investors are waiting on the Federal Reserve’s Wednesday rate decision.
- CVS Health jumped 5% after projecting strong earnings growth.
- Toll Brothers and AutoZone fell sharply on weak quarterly results.
- Mortgage rate concerns continue to affect housing affordability and homebuilder stocks.
- The Fed is expected to announce its third rate cut of 2025.
- Market focus is on future rate guidance for 2026.
- Ares Management stock rose 6% after S&P 500 inclusion news.
- Nvidia slipped 0.8% after Trump approved chip sales to China.
- Bond yields edged lower, with the 10-year Treasury at 4.15%.
Wall Street Steady Ahead of Fed Rate Decision
Deep Look
Wall Street took a cautious stance Tuesday as traders looked ahead to the Federal Reserve’s pivotal interest rate decision expected Wednesday afternoon. With the S&P 500 nearly unchanged, the Dow Jones Industrial Average gaining 145 points (0.3%), and the Nasdaq dipping 0.2%, investors largely stayed on the sidelines in anticipation of what could be a market-moving announcement.
This week’s Fed meeting marks one of the final major economic events of 2025, and markets are largely pricing in a third rate cut for the year. However, the real intrigue lies in what comes next: Will the central bank signal more rate cuts for 2026, or will it strike a more cautious tone?
Investor Uncertainty Remains
Despite a strong stock market rally over the past month—powered by expectations of looser monetary policy—the Federal Reserve’s tone could change quickly if inflation remains stubbornly above its 2% target. Some Fed officials remain wary that too many cuts could reignite inflation, while others are concerned about a weakening labor market.
“The Fed is walking a tightrope,” said one market strategist. “Investors want reassurance that rate relief will continue, but the Fed is balancing economic risks on both sides.”
CVS Soars, Retailers Slide
Among the biggest stock movers Tuesday was CVS Health, which jumped 5% after releasing new financial projections. The company expects mid-teens percentage growth in earnings per share over the next three years, and executives expressed confidence in their trajectory.
“We are committed to doing what we say,” CFO Brian Newman told investors, citing strong year-end momentum as a reason for optimism.
Meanwhile, not all corporate news was upbeat. Homebuilder Toll Brothers saw its stock fall 4.6% after reporting weaker-than-expected quarterly results. CEO Douglas Yearley Jr. acknowledged that home demand remains soft, even among wealthier buyers the company typically targets.
Affordability remains a central issue in the housing market. Mortgage rates, while down from early-year highs, have risen slightly since October. Those rate fluctuations, largely driven by bond market movements, continue to put pressure on potential homebuyers—and by extension, homebuilders.
AutoZone also dropped 4.4% after missing analyst expectations for the quarter, citing a slowdown in discretionary consumer spending.
Nvidia Dips on China Chip News
Tech giant Nvidia slipped 0.8% after President Donald Trump approved the sale of the company’s H200 AI chips to approved customers in China. While the H200 isn’t Nvidia’s most advanced product, the move still raised questions about U.S.-China tech competition and export policy going forward.
Ares Management Gains on S&P Inclusion
Ares Management surged 6% after S&P Dow Jones Indices announced the firm would join the S&P 500 index, replacing Kellanova—the snack maker behind brands like Pop-Tarts and Pringles. Kellanova is being acquired by Mars, the maker of M&Ms and Snickers, removing it from the index.
Index rebalancing often triggers investor moves as mutual funds and ETFs tracking the S&P 500 adjust their holdings to reflect the change.
Global Markets Mixed
Stock indexes in Europe and Asia were mostly mixed. Hong Kong’s Hang Seng index dropped 1.3%, while France’s CAC 40 in Paris slipped 0.5%, reflecting global investor hesitation ahead of the Fed’s decision.
Bond Market Holds Steady
Treasury yields edged slightly lower Tuesday, with the 10-year Treasury yield dipping to 4.15% from 4.17% the previous day. Lower yields suggest investors are seeking safe havens as they wait for clear signals from the Fed.
What’s Next for Markets?
The Fed’s decision on Wednesday won’t just be about whether it cuts rates again—it will be about what message it sends for 2026. Many on Wall Street expect some form of pushback from the central bank against aggressive expectations for multiple cuts next year.
With inflation still not fully under control and job growth showing signs of slowing, the path ahead remains uncertain. Investors are hoping for clarity, but they may have to settle for nuance.
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