Wall Street stocks fell on Tuesday as the U.S. Federal Reserve began a two‑day meeting that many expect will end with an interest‑rate cut. The S&P 500 and Nasdaq Composite initially rose to new record highs in early New York trading, but soon slipped into negative territory. The prospect of a Fed cut is being driven by recent data showing a softening labor market and moderate inflation. “The Fed’s focus appears to have shelved inflation concerns for now, instead concentrating on a stalling US jobs market, which should lead to a 0.25‑percent cut,” said Richard Hunter, head of markets at Interactive Investor.
Despite worries about overvaluation—especially in tech shares—investors have largely ignored those concerns. Fawad Razaqzada, an analyst at City Index and FOREX.com, noted that investors are taking profits on the recent tech rally ahead of the Fed committee meeting. Retail‑sales data released on Tuesday showed a 0.6 percent increase in August, well above the 0.2‑percent expectation, suggesting that U.S. consumers are not holding back despite the weakening jobs market. In addition, U.S. non‑fuel import prices rose 0.4 percent in August after posting no gain in July.
The Tuesday data are unlikely to alter the market’s expectation of a 25‑basis‑point rate cut, though they may temper calls for a larger, 50‑basis‑point reduction, according to Patrick O’Hare of Briefing.com. The dollar fell against its major rivals, becoming less attractive to investors as interest‑rate expectations slipped. Consequently, gold surged to an all‑time high near $3,700 an ounce, driven by expectations of lower U.S. rates over the coming months and possibly into 2026. The euro reached its strongest level against the dollar since 2021, while the British pound also firmed.
European stock markets declined on Tuesday after a steady performance by Asia’s main indices. In Frankfurt, shares of Germany’s Thyssenkrupp jumped about eight percent after India’s Jindal Steel International made an offer for the company’s steel division. Market sentiment was further buoyed by news of a U.S.–China deal on TikTok, which President Donald Trump is expected to confirm on Friday.
The drop in stocks and the dollar’s slump reflect market anticipation of the Fed’s interest‑rate decision. As the meeting continues, investors will be watching closely for any clues about the central bank’s future monetary policy, recognizing that the outcome could have far‑reaching implications for the global economy and financial markets.
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