Wall Street falls awaiting Fed meeting rate decisions

The Dow Jones rises 129 points, or 0.3%. He S&P 500 falls by 0.5%, while the Nasdaq Composite lost 0.9%. The Russell 2000 recovered some of the ground lost on Monday and climbed 0.6%.

Investors will also be closely watching numbers from Microsoft, Advanced Micro Devices and Starbucks after the market closes.

The earnings season has been solid so far. Of the more than 230 S&P 500 companies that have reported, about 80% have beaten earnings expectations, according to FactSet data.

Wall Street: What the market is analyzing

“We are seeing an expansion in earnings growth,” said Mona Mahajan, principal and senior investment strategist at Edward Jones. “We think that with tech earnings, the bar is high. If we see signs of a slowdown in AI spending, we could see a slight correction in the stock. But we are already through a reasonable correction.”

Mahajan added that he believes the soft landing narrative remains intact, and a potential rate cut by central banks coupled with subdued inflation could contribute to a favorable environment for continued market expansion as investors look to areas outside of large-cap tech.

The policy meeting of The Federal Reserve’s two-day meeting began on Tuesdaywith investors waiting for Chairman Jerome Powell to indicate the timing and number of rate cuts expected in the coming months. Traders have built in a probability of the 100% for a rate reduction in Septemberaccording to the CME FedWatch tool.

“Inflation is trending lower, which supports the Fed’s rate cuts,” said Seema Shah, chief global strategist at Principal Asset Management.This, coupled with a still robust economic outlook and strong corporate earnings, should support risk assets and lead to an expansion of returns beyond just technology..”