S&P500 and Nasdaq 100: US Stocks Steady as Traders Await Powell’s Fed Outlook

Wall Street Inches Up as Traders Brace for Fed Decision and Geopolitical Risks

U.S. equities nudged higher Wednesday as investors waited on the Federal Reserve’s interest rate decision and tracked escalating tensions in the Middle East. All major indexes traded cautiously with the S&P 500 and Nasdaq still hovering near recent peaks, though geopolitical uncertainty has capped risk appetite.

The Federal Reserve is widely expected to hold interest rates steady. Traders are watching closely for any hints from Chair Jerome Powell on inflation control and the timing of potential rate cuts. Fed funds futures imply around 46 basis points of cuts by year-end, with a 55% chance of a quarter-point cut in September, according to CME’s FedWatch tool.

Is the Federal Reserve Sticking to Higher-for-Longer?

Fed commentary remains central as sticky inflation and global conflict muddy the economic outlook. Goldman Sachs’ Simon Dangoor warned of a potential income shock from tariffs and emphasized upcoming data as critical to policy direction. For now, the central bank appears to be in a holding pattern, balancing persistent inflation against cooling labor momentum.

Initial jobless claims dipped last week but stayed elevated, pointing to a gradual slowdown in the labor market. That keeps the Fed on alert for economic softness without giving a green light for aggressive easing.

S&P 500 and Nasdaq Hold Firm Despite Geopolitical Strain

The S&P 500 sits just 2.5% below its all-time high, while the Nasdaq trails by 3.3%. Both indexes had rallied through May before Israel-Iran tensions triggered broader risk aversion. Reports suggest U.S. policymakers are weighing potential involvement in strikes on Iranian nuclear sites, further complicating global sentiment.

Advancing stocks outpaced decliners on both the NYSE and Nasdaq, though new 52-week highs were modest relative to lows—signaling some hesitance ahead of the Fed announcement.

Sector Moves Highlight Investor Caution and AI Optimism

Energy and consumer discretionary stocks led gains, each adding 0.6%. Healthcare was the lone major sector in the red, down 0.4%. AI-related names outperformed, with Marvell Technology jumping 8.7% after hitting a three-month high. Tesla rose 1.8%, while Circle Internet surged 6.2% after Senate approval of stablecoin legislation.

Scholar Rock rocketed 17.4% on promising mid-stage trial results with a drug combination involving Eli Lilly’s obesity treatment. Nucor climbed 4.9% after a second-quarter profit outlook exceeded forecasts.

What’s Next for Markets After the Fed?

Traders will dissect Powell’s comments for any signal on the path forward. With geopolitical tensions and inflation concerns still in play, near-term equity upside may hinge on clarity from the Fed and incoming economic data, particularly next week’s PCE inflation report and consumer sentiment readings.

More Information in our Economic Calendar.