S&P500: Tech Stocks Power US Stock Market Rally Ahead of Fed Decision

Stock Market Opens Mixed as Investors Await Fed Decision and Megacap Earnings

The major U.S. stock indexes opened mixed but mostly higher on Tuesday as investors brace for the Federal Reserve’s rate decision Wednesday afternoon, followed by the release of megacap earnings reports.

At 15:03 GMT, the Dow Jones Industrial Average is trading 48986.61, down 425.79 or -0.86%. The S&P 500 Index is at 6975.70, up 25.47 or +0.37% and the Nasdaq Composite is trading 23789.404, up 188.048 or +0.80%.

Technology and Energy Lead Gains While Health Sector Stumbles

The strongest sectors on Tuesday are Technology (+0.80%), Energy (0.63%) and Utilities (0.48%). The weakest sector is Health (-1.00%).

The major technology stocks boosting the sector in early trading are Micron, Apple and Microsoft, each higher by 3.73%, 1.89%, and 1.10% respectively. Chevron is boosting the Energy sector with a 1.07% jump.

Health Insurers Plunge on Medicare Payment Proposal

The Health sector is being pressured by losses in the shares of several big-name health insurers including a 16% drop in UnitedHealth. Humana slid 18%, while CVS Health lost 8.9%. The sector is plunging after the Centers for Medicare & Medicaid Services proposed raising payments to Medicare Advantage insurers by a net average of just 0.09% in 2027, CNBC said.

Earnings Season Heats Up: 200 Companies Report Over Next Two Weeks

More than 90 S&P 500 companies are slated to report quarterly earnings this week. After the close on Wednesday, Meta, Microsoft and Tesla will release their fourth quarter results, Apple will reveal its results on Thursday.

“Top of mind is earnings season. We got 200 companies reporting in the next two weeks and so far, so good,” said Adam Parker, founder and CEO of Trivariate Research. “I think the real issue is that the second half of the year estimates are way too high. And so the question is can we keep the momentum here through April guidance? I think yes.”

Federal Reserve Meeting: Rate Hold Expected, Future Cut Timing in Focus

The Federal Reserve starts its first meeting of the year on Tuesday with its policy decision coming on Wednesday at 18:00 GMT. Policymakers are widely expected to keep the benchmark rate at a target range of 3.5% to 3.75%, but investors will search the policy statement for clues on when future cuts may come. Fed Chair Jerome Powell’s post-announcement press conference will also be closely monitored. The latest data shows Fed funds futures trading still suggests there could be two quarter percentage point cuts by year-end 2026, according to the CME FedWatch Tool.

Technical Outlook: S&P 500 Futures Build Momentum Above Key Support

Upside momentum is building in E-mini S&P 500 Index futures now that the market has crossed to the bullish side of a short-term retracement zone at 6951.50 to 6925.50, which is new support. The major support is the 50-day moving average at 6898.32.

The first upside objective today is a trendline at 7033.25, followed by the record high at 7036.25.

More Information in our Economic Calendar.