S&P 500, Nasdaq Fall From Record Highs as Fed Decision Looms

05:01 PM EDT, 09/16/2025 (MT Newswires) -- The S&P 500 and the Nasdaq Composite fell from record levels on Tuesday as the Federal Reserve kicked off its two-day monetary policy meeting.

The two indexes lost 0.1% each to close at 6,606.8 and 22,334, respectively. Both hit all-time highs on Monday, marking the Nasdaq's sixth straight record close. The Dow Jones Industrial Average fell 0.3% to 45,757.9.

Among sectors, utilities saw the biggest drop, while energy led the gainers.

Markets widely expect the central bank's Federal Open Market Committee to lower its benchmark lending rate by 25 basis points Wednesday, according to the CME FedWatch tool. Many analysts expect the move to be the start of an easing cycle amid worries about a softening US labor market.

Fed Chair Jerome Powell is expected to "offer balance" after the decision, Macquarie said in a Tuesday note.

"He'll highlight again the downside risk to employment growth, but refrain from signaling a (long) string of cuts after September," Macquarie said. "That could rally the USD, hurt gold, and cause a tremor tomorrow in the tectonic drift higher in tech stocks."

Spot gold broke above $3,700 per troy ounce in Tuesday session, hitting a record high, and was most recently up 0.4% at $3,692.85. Gold futures for December delivery rose as high as $3,739.5 per ounce, and were last trading up 0.3% at $3,730.15.

Low borrowing costs tend to boost gold's appeal as a non-yielding asset.

The dollar index fell 0.7% at 96.67 in Tuesday late-afternoon trade.

Swap markets price in at least one more rate cut this year after September's move, "with a strong chance of a third," ING Head of Commodities Strategy Warren Patterson said in a note. "These expectations have pushed Treasury yields to multi-month lows and weakened the dollar index," Patterson said.

On Monday, the Senate confirmed US President Donald Trump's nominee Stephen Miran to join the Fed's board of governors, replacing Adriana Kugler, who resigned in August.

US Treasury yields were lower, with the two-year rate decreasing 2.9 basis points to 3.52% and the 10-year rate losing 1.4 basis points to 4.03%.

In economic news, US retail sales growth accelerated last month amid broad-based gains, including in spending on motor vehicles and at fuel stations, the Census Bureau said.

"Spending among low-income consumers is still under pressure from a weakening labor market, and a policy mix that is weighing on real disposable incomes," Oxford Economics said. "With tariff pass-through slower than expected, the Fed on the verge of resuming rate cuts, and the impact of tax cuts likely to build over coming quarters, the outlook for consumer spending is brightening."

US homebuilder confidence held steady this month, though future sales projections reached a six-month high amid lower mortgage rates and prospects of monetary policy easing by the Fed, according to data from the National Association of Home Builders and Wells Fargo.

"While builders continue to contend with rising construction costs, a recent drop in mortgage interest rates over the past month should help spur housing demand," NAHB Chairman Buddy Hughes said.

US industrial production logged a surprise increase in August as manufacturing output rebounded amid strong growth in motor vehicles and parts, data from the Federal Reserve showed.

"Industrial production performed better than expected in August, and (the) key to its resilience so far has been the (artificial intelligence) tailwinds to information processing equipment and a comeback in aerospace," Oxford Economics Lead US Economist Bernard Yaros said in remarks e-mailed to MT Newswires.

In company news, Warner Bros. Discovery (WBD) shares were down 6.2%, the worst performer on the S&P 500, as TD Cowen downgraded the media and entertainment giant's stock to hold from buy.

Nvidia (NVDA) saw the second-biggest decline on the Dow, down 1.6%. The chipmaking giant's newest artificial intelligence chip for the Chinese market has met with lukewarm demand and some major tech firms have not placed orders, Reuters reported, citing unnamed sources.

Steel Dynamics (STLD) shares jumped 6.2%, the second-top gainer on the S&P 500. The steel producer said late Monday it expected third-quarter earnings rise annually and sequentially, buoyed by improved profit from its three operating businesses.

Ferguson Enterprises (FERG) reported a double-digit year-over-year increase in its fiscal fourth-quarter earnings on Tuesday, while the plumbing and heating products company's sales came in ahead of market expectations. Its shares jumped 7.9%.

West Texas Intermediate crude oil was up 2% at $64.57 a barrel in Tuesday late-afternoon trade.

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