Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 15, 2025.
Brendan McDermid | Reuters
Stocks edged slightly lower on Tuesday as investors took some profits ahead of a highly-awaited Federal Reserve interest rate decision.
The S&P 500 traded 0.13% lower to close at 6606.76, after hitting a fresh record earlier in the session. The Nasdaq Composite lost 0.07% to finish the session at 22,333.96. The Dow Jones Industrial Average dropped 125.55 points, or 0.27%, to close at 45,757.90.
Key bull market leaders declined, with shares of Nvidia and Microsoft losing 1.6% and 1.2%, respectively. Palantir and Google parent Alphabet also pulled back.
The two-day Fed meeting, which kicked off on Tuesday, is expected to result in a rate cut for the first time since December. Interest rate futures are pricing in a 100% certainty of at least a quarter-point rate cut, according to the CME’s FedWatch tool. What investors are watching most is the central bank’s forecast for rates for the rest of the year and whether voting members are expecting one more additional cut or two more before 2025 ends.
Traders will also closely monitor Fed Chair Jerome Powell’s subsequent press conference for any clues on the future of monetary policy. The meeting also comes with some political tension, after the Senate confirmed President Donald Trump’s pick to join the central bank, Stephen Miran. The president is also attempting to remove Fed Governor Lisa Cook, who is voting at the meeting with Miran.
“Although labor demand is softening, labor supply issues continue to offset the weakness, and recession risks remain limited for now,” said Seema Shah, chief global strategist at Principal Asset Management. “Any decision to cut by 50 basis points at this stage would appear to be driven more by political pressure than economic necessity. A more measured 25 basis point cut remains the appropriate response, allowing the Fed to get ahead of a slowdown without overreacting to early signs of strain.” (One basis point equals 0.01%.)
Traders continue to monitor developments on global trade discussions and so-called reciprocal tariffs that are set to take effect in November.
U.S. Treasury Secretary Scott Bessent told CNBC on Tuesday that he expects further talks before that deadline, and that “the Chinese now sense that a trade deal is possible” after U.S. and Chinese officials wrapped up two days of talks in Madrid on Monday. Trump also gave a positive assessment of the trade discussions on Monday, which led U.S. stocks to rally and pushed the S&P 500 to close above 6,600 for the first time.
During their talks this week, U.S. and Chinese officials reached a “framework” agreement on TikTok to allow the social media app to keep operating in the U.S. Sources confirmed to CNBC on Tuesday that Oracle will be among the firms enabling TikTok, which led the stock 1.5% higher on Tuesday.
Yet U.S. Trade Representative Jamieson Greer said on Monday that broader trade discussions had been “deferred” to another time given the intense focus on reaching a deal regarding TikTok.