Stock Market Today: Fed Cut in Focus as S&P 500, Nasdaq, Dow Retreat

Indices Trade Cautiously Ahead of Fed Rate Decision

U.S. equities entered Tuesday’s session with heightened anticipation as the S&P 500 (^GSPC) slipped 0.15% to 6,605.45, the Nasdaq Composite (^IXIC) retreated 0.12% to 22,328.72, and the Dow Jones Industrial Average (^DJI) fell 0.25% to 45,769.15, shedding 114 points. The pullback followed record-setting closes a day earlier, with the S&P finishing above 6,600 for the first time in history. Markets are entering a pivotal two-day Federal Reserve meeting, where expectations of a 25 basis-point rate cut are at 96% probability, while only a slim 4% chance remains for a more aggressive 50 basis-point move. The balance between policy easing and concerns over sticky inflation has kept volatility elevated, as reflected in the VIX climbing to 16.19, up 3.2% on the day.

Consumer Resilience Drives Retail Sales Surprise

Retail activity in August once again surprised to the upside, with headline sales climbing 0.6% month-over-month, well above consensus forecasts of 0.2%. Excluding automobiles and gasoline, core sales rose 0.7%, powered by strong e-commerce performance and clothing sales during the back-to-school season. The data comes on top of a revised 0.6% July gain, demonstrating that consumer momentum has yet to wane despite labor market softness and tariff-driven cost pressures. On a year-over-year basis, sales jumped nearly 5%, comfortably outpacing the 2.9% rise in CPI inflation. This resilience provides the Fed with a more complex backdrop, as lowering rates into robust demand risks igniting inflation, while standing pat could trigger financial tightening in a cooling jobs market.

Nasdaq Heavyweights Split: TSLA and AMZN Outperform While NVDA Lags

The Nasdaq Composite remains the bellwether for market leadership, and Tuesday displayed a stark divergence among the Magnificent Seven. Tesla (TSLA) surged 2.24% to $419.24, extending a powerful rally after CEO Elon Musk disclosed a 2.5 million share purchase, his first since 2020. The move pushed Tesla’s performance back into positive territory for the year, with the stock now up 85% from its April low of $227. Amazon (AMZN) climbed 1.67% to $235.27, supported by the announcement of its October Prime Day sales event, highlighting e-commerce tailwinds. Apple (AAPL) added nearly 1% to $238.86, as demand builds ahead of the launch of new Apple Watches later this week. In contrast, Nvidia (NVDA) slipped 1.29% to $175.46, pressured by news that China extended its antitrust probe. Microsoft (MSFT) and Alphabet (GOOGL) each drifted modestly lower, underscoring investor selectivity within the group.

Oracle Extends Momentum Amid TikTok Deal Framework

Oracle (ORCL) continued its extraordinary 2025 run, gaining 0.68% to $304.18 as reports confirmed its inclusion in the preliminary U.S.–China TikTok agreement. The deal secures Oracle’s role in Project Texas, safeguarding American user data on U.S. servers. Year-to-date, Oracle shares are up 81%, with a 33% gain in September alone. The company’s long-term strategy includes a 14-fold increase in cloud revenue by 2030, a forecast heavily tied to AI contracts such as OpenAI. With Washington and Beijing set to finalize details later this week, Oracle remains one of the strongest policy-backed beneficiaries in the market.

Dow Components and Consumer Stocks: Mixed Signals

While the Dow Jones Industrial Average slipped on the session, individual components displayed contrasting fortunes. Ralph Lauren (RL) retreated 1.29% to $311.70, despite fiscal 2025 revenue rising 6.8% to $7.1 billion. Management projected mid-single-digit annual growth over the next three years, a forecast seen as conservative relative to 34% year-to-date share gains. Elsewhere, Ford (F) fell 1.11% to $10.05 after announcing up to 1,000 job cuts in its German electric vehicle operations due to weakening demand. Meanwhile, Apple (AAPL) and Microsoft (MSFT) provided some stability within the index, though declines in financials weighed on broader Dow performance.

Novo Nordisk Regains Momentum in Healthcare Trade

Novo Nordisk (NVO) rallied 3.02% to $57.30 as the Danish drugmaker outlined plans to seek FDA approval for a high-dose version of its blockbuster obesity treatment Wegovy. Additionally, the company received a regulatory boost in Europe, where its diabetes pill Rybelsus became the first GLP-1 drug in tablet form approved to reduce cardiovascular risk. Despite these positive catalysts, shares remain down 34% in 2025, highlighting the volatility tied to supply chain bottlenecks and competitive entrants in the obesity drug space.

Small Caps and Financials Continue to Lag

The Russell 2000 shed 0.66% to 2,389.21, underlining persistent pressure on smaller, more domestically exposed firms. Rising tariffs, financing constraints, and the specter of lower profit margins have kept investors cautious on small caps. Bank stocks also underperformed, with the KBW Nasdaq Bank Index sliding 1.04% to 149.72, as the likelihood of multiple Fed cuts in 2025 threatens to erode net interest income. This divergence underscores the dominance of large-cap growth over cyclicals in the current cycle.

Treasuries Rally While Dollar Softens

The 10-year U.S. Treasury yield edged down to 4.035%, with government bonds posting a 5.8% return YTD, outperforming all other major sovereign debt markets. The narrowing spread against global peers signals renewed safe-haven demand ahead of potential Fed easing. Simultaneously, the Dollar Index weakened 0.44% to 94.21, its lowest level in four years versus the euro, amplifying the appeal of alternative assets such as gold and commodities.

Gold Smashes Through $3,700 to Record Levels

Gold (GC=F) surged to $3,721.40 per ounce, breaking decisively above the psychological $3,700 mark after setting a record of $3,685 earlier this week. The metal is now up 44% in 2025, eclipsing equity performance and moving beyond its inflation-adjusted peak from 1980. Analysts warn that if even 1% of Treasury holdings shift to bullion, prices could surge toward $5,000. Central bank purchases, ETF inflows, and haven demand amid tariff wars continue to provide a powerful tailwind. This rally positions gold as the premier hedge against policy missteps and geopolitical risk.

Oil Steadies as Ukraine Strikes Russian Energy Infrastructure

Crude benchmarks extended gains, with WTI (CL=F) rising 1.8% to $64.44 and Brent (LCO=F) climbing 1.5% to $68.14. Ukrainian drone strikes on Russian export hubs, including Primorsk and the Kirishinefteorgsintez refinery, have raised concerns about supply disruptions to major buyers in Asia. While global demand signals remain mixed, geopolitical supply risks are providing near-term price support.

Speculative Stocks: Divergence Between Winners and Losers

Meme-driven sentiment persisted, with GameStop (GME) climbing 3%, extending its winning streak to eight consecutive sessions and gaining over 15% in that span. On the other hand, Dave & Buster’s (PLAY) collapsed 15.7% to $40 after posting $0.40 EPS versus $0.91 expected, reflecting weak consumer traffic. Rocket Lab (RKLB) dropped 10.3% following a $750 million stock offering, while Oscar Health (OSCR) slid 3.6% on news of a $350 million convertible note issuance. The wide variance underscores speculative excess in select equities even as institutional flows concentrate in megacap names.

Market Outlook: Preference for Large-Cap Tech and Gold

The market dynamic is clear—investors are rewarding scale, resilience, and policy-backed growth. Tesla (TSLA) and Amazon (AMZN) stand as momentum plays, while Oracle (ORCL) is structurally positioned as a beneficiary of AI and U.S.–China trade diplomacy. Gold above $3,700/oz is a buy for hedging purposes, with potential to move significantly higher if Fed cuts accelerate. Small caps and banks remain vulnerable, suggesting underweight positioning in the Russell 2000 and KBW Bank Index. The balance of evidence supports a BUY recommendation on large-cap growth and gold, HOLD on energy exposure, and SELL small-cap cyclicals.

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