Nasdaq 100 and US Stocks: Tech Resilience Tested as Fed Meeting Takes Spotlight

Wall Street Slips as Traders Hold Fire Ahead of Fed Decision and Retail Sales Analysis

U.S. stocks edged lower Tuesday as investors shifted into a cautious stance ahead of the Federal Reserve’s closely watched policy decision. The S&P 500 fell 0.16%, while the Nasdaq slipped 0.05%. The Dow Jones Industrial Average dropped 181 points, pressured by losses in financials and key blue-chip names like Microsoft and UnitedHealth.

The market largely expects a 25 basis point rate cut at the conclusion of the Fed’s meeting on Wednesday. This outlook follows persistent signs of a cooling labor market and tepid economic momentum, which have kept traders pricing in about 68 basis points of easing by the end of 2025, according to LSEG data.

Retail Sales Surprise, But Impact on Fed Bets Remains Muted

August retail sales rose more than expected, according to fresh Commerce Department data, but did little to shift existing rate cut expectations. Investors appear focused more on broader economic weakness than isolated data beats.

Strategists including Art Hogan of B Riley Wealth said the market reaction was muted, as most participants remain in a wait-and-see mode ahead of the Fed’s announcement. Additional political developments, including the Senate’s confirmation of Stephen Miran to the Fed Board and a legal win for Governor Lisa Cook, failed to move rate forecasts.

Financial Sector and UnitedHealth Drag Dow Lower

Financial stocks led declines, with the S&P 500 financials sector dropping 0.7% and the regional banking index losing 1.8%. The drag deepened as UnitedHealth and Microsoft posted losses that weighed heavily on the Dow.

In sector action, eight of the 11 major S&P sectors traded lower. Communication services fell on the back of an 8% slide in Warner Bros Discovery, following a downgrade by TD Cowen. Conversely, energy stocks gained 0.9% as oil prices climbed, while consumer discretionary caught a lift from Tesla and Amazon.

Tesla, Oracle and Webtoon Outperform in Mixed Stock Action

Tesla extended gains following Monday’s surge, which helped push the Nasdaq and S&P 500 to record highs. Oracle rose 3% on reports it will retain its TikTok cloud contract. Meanwhile, Webtoon Entertainment jumped 28% after announcing a digital comics partnership with Disney.

Elsewhere, Dave & Buster’s tanked 17.4% after missing quarterly estimates, weighing on sentiment in the consumer discretionary space.

Market Outlook: All Eyes on the Federal Reserve

Traders will be laser-focused on the Fed’s policy statement and Chair Jerome Powell’s commentary Wednesday. While a 25 basis point cut is expected, any clues on future easing pace could drive volatility.

With equities entering a historically weak month, investors are balancing optimism over AI and tech earnings with caution on monetary policy and economic resilience.

More Information in our Economic Calendar.