Stock Market Today: Dow Climbs as Fed Meeting Begins, Nasdaq Slips on Nvidia Weakness and Earnings Pressure
Indices Mixed as Investors Await Fed Rate Decision
U.S. equities opened Tuesday in a narrow range as investors positioned ahead of the Federal Reserve’s final policy meeting of 2025. The Dow Jones Industrial Average (DJIA) edged up 0.21% to 47,841.56, extending its moderate outperformance, while the S&P 500 (SPX) was nearly unchanged at 6,850.34. The Nasdaq Composite (IXIC) underperformed, slipping 0.17% to 23,506.14, pressured by losses in large-cap tech names. The Russell 2000 (RUT) small-cap index fell 0.02% to 2,520.98, showing signs of exhaustion after a sharp November rally.
The market’s muted tone reflected a “wait-and-see” sentiment ahead of Wednesday’s Federal Open Market Committee (FOMC) decision, where expectations point to a 25-basis-point rate cut. According to CME’s FedWatch Tool, futures now price in an 89% probability of a reduction, mirroring earlier cuts in September and October. However, traders are divided over the trajectory for 2026, particularly after White House economic adviser Kevin Hassett, the frontrunner for the next Fed chair, signaled caution on extending the easing cycle.
Federal Reserve Policy and Treasury Market Reaction
Bond yields eased slightly after a recent surge to multi-month highs. The U.S. 10-year Treasury yield (US10Y) slipped to 4.153%, while the 2-year yield traded near 3.577%, suggesting moderate repricing of rate-cut expectations. Treasury desks are focused on the $39 billion 10-year auction later today, which could influence short-term yields. The CBOE Volatility Index (VIX) rose 2.94% to 17.15, reflecting renewed caution across risk assets.
Traders are also monitoring the delayed Job Openings and Labor Turnover Survey (JOLTS) for September and October, expected to show continued cooling in labor demand. The reading will provide the Fed with one final snapshot of employment conditions before its December decision. Analysts warn that a lower job openings figure could validate the Fed’s soft-landing narrative, while a surprise uptick may challenge dovish bets for 2026.
Nvidia (NASDAQ:NVDA) Dips After Trump Approves China Chip Sales
Nvidia Corp. (NVDA) shares fell 0.65% to $184.37 despite a headline-grabbing development: President Trump confirmed that the U.S. will permit Nvidia to sell its H200 AI processors to “approved customers” in China, under the condition that 25% of revenue from those sales goes to the U.S. government. The H200, more advanced than the export-compliant H20, had been blocked earlier under semiconductor export restrictions.
However, Beijing’s countermeasures diluted the market’s enthusiasm. Reports from the Financial Times indicated that China will restrict domestic companies’ access to the H200, echoing previous prohibitions on H20 chip purchases. The result leaves Nvidia with symbolic regulatory relief but minimal commercial gain. The stock’s muted reaction underscores investors’ skepticism that Chinese demand will meaningfully bolster fiscal 2026 revenue. Nvidia remains a hold, with valuation risk offsetting its leadership in AI compute supply.
Broadcom (NASDAQ:AVGO) and Microsoft (NASDAQ:MSFT) Partnership Speculation Lifts Chip Sector
Semiconductor momentum stayed uneven. Broadcom (AVGO) traded flat near $1,749, stabilizing after a 2.8% rally in the prior session on reports that Microsoft (MSFT) may develop custom chips in collaboration with Broadcom instead of Marvell Technology (MRVL). This potential shift could strengthen Broadcom’s foothold in AI infrastructure design as hyperscalers accelerate diversification beyond Nvidia’s ecosystem. Microsoft shares held near $421, marginally higher, while AMD (NASDAQ:AMD) hovered around $127, extending its consolidation phase. The sector’s leadership remains intact, though risk sentiment ahead of Fed commentary has kept gains capped.
Earnings Movers: CVS and Ares Rally, Home Depot and AutoZone Lag
Corporate earnings contributed to sharp divergences across sectors. CVS Health Corp. (NYSE:CVS) surged 5% after issuing 2026 profit guidance above Wall Street forecasts, signaling progress in its multi-year turnaround strategy. The pharmacy chain’s reaffirmed earnings outlook restored confidence following months of margin pressure in its health services division.
Ares Management Corp. (NYSE:ARES) soared 6.17% to $174.40 after confirmation it will join the S&P 500 Index, replacing Kellanova (NYSE:K) upon its acquisition by Mars. Index fund inflows and institutional rebalancing drove strong volume in Ares, positioning the alternative asset manager for additional passive demand through year-end.
Conversely, Home Depot (NYSE:HD) fell 1% after guiding for only 0%-4% earnings growth in 2026, below analysts’ 5.2% forecast. The tepid outlook suggests continued pressure from soft housing activity despite lower mortgage rates. AutoZone (NYSE:AZO) dropped 5.39% to $3,564.01 following weaker-than-expected quarterly results, reporting EPS of $31.04 versus $32.51 consensus and revenue of $4.63 billion, narrowly missing estimates. Toll Brothers (NYSE:TOL) slid 2.91% to $132.17 as promotions eroded margins, producing EPS of $4.58 below the $4.89 expectation. Both housing-related names reflect ongoing strain from high construction costs and cautious consumer sentiment.
Sector Rotation and Commodities Performance
Market internals revealed selective rotation. Energy stocks softened alongside commodity prices. Crude oil (CL=F) slipped 0.29% to $58.71, pressured by rising U.S. output and concerns of a 2026 supply surplus. The S&P GSCI Spot Index fell 0.46% to 553.02, while natural gas (NG=F) remained volatile near $4.71/MMBtu, retracing after last week’s weather-driven spike. Gold (XAU/USD) advanced 0.29% to $4,229.80, benefiting from lower yields and a weaker U.S. Dollar Index (DXY), which edged up just 0.02% to 96.58. The metal continues to find support above the $4,200 zone, with Fed dovishness potentially triggering a retest of record highs.
Cryptocurrency Weakness Continues: Bitcoin (BTC-USD) Slips Below $91,000
Bitcoin (BTC-USD) extended its pullback, down 0.46% to $90,392.64, with total crypto market capitalization falling 1% in early trading. Risk-off sentiment ahead of the Fed meeting weighed on speculative assets. Additionally, PNC Financial Services (NYSE:PNC) shares fluctuated after news the bank will allow high-net-worth clients to trade Bitcoin directly through Coinbase (NASDAQ:COIN). The move, though bullish for crypto integration, coincided with short-term price pressure across digital assets.
Political and Policy Focus: Trump’s Rate-Cut Test for Fed Chair
Political headlines also shaped sentiment. President Donald Trump confirmed that any nominee to succeed Jerome Powell as Fed Chair must pledge to lower interest rates immediately. Kevin Hassett remains the frontrunner, viewed favorably by markets for his dovish stance. The interview added to speculation that the next policy cycle could shift toward political influence, further tying Fed credibility to inflation management outcomes.
Meanwhile, Trump’s temporary tariff reversals on consumer goods — alongside proposals for $2,000 tariff rebate checks and 50-year mortgage programs — underscored attempts to counter rising affordability concerns. Yet polls indicate economic dissatisfaction persists: RealClearPolitics shows Trump’s economic approval at 39.8%, versus 57.6% disapproval, marking it as a key risk for GOP midterm prospects.
Global Markets and Currency Dynamics
Abroad, the Australian dollar strengthened after the Reserve Bank of Australia hinted at potential rate hikes in 2026. European bond yields mirrored U.S. declines, while Asian equities traded mixed following reports that Beijing may cap corporate purchases of Nvidia’s H200 chips, tempering optimism over U.S.-China tech trade relief.
Market Outlook: Fed to Define Direction for Year-End Rally
Market participants are bracing for volatility into Wednesday’s Fed announcement (2 p.m. ET). With the Dow maintaining modest leadership and the Nasdaq pressured by tech softness, the next move hinges on whether the Fed signals a pause or hints at continued easing into 2026. Bond yields near 4.15%, gold at $4,229, and volatility creeping higher all underscore investor indecision.
For now, the equity market’s bias remains cautiously bullish into year-end — contingent on a dovish policy tone and stable earnings from Oracle (NYSE:ORCL), Broadcom (NASDAQ:AVGO), Costco (NASDAQ:COST), and Lululemon (NASDAQ:LULU) later this week. Upside momentum for the S&P 500 above 6,850 could target the 6,920–6,950 range, while the Nasdaq remains vulnerable below 23,600.
Verdict:
Short-term bias remains neutral to bullish with selective sector strength in financials and AI infrastructure, while energy and housing lag. The broader market’s next directional cue will depend on Fed tone and Treasury yield stability.
S&P 500 – Hold | Nasdaq – Neutral | Dow – Mild Buy
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