Investor Caution as Fed Decision Looms Amid Market Volatility

The S&P 500 dipped slightly as investors prepared for a hawkish Federal Reserve stance, despite anticipated interest rate cuts. Market sentiment was further influenced by rising Treasury yields and mixed economic indicators, while corporate developments in AI and technology added complexity to trading dynamics.

The S&P 500 ended Tuesday's trading session with a slight decline as investors braced for the Federal Reserve's anticipated hawkish stance, even with a potential interest rate cut this week. JP Morgan's warning about high expenses through 2026 also curbed market gains, contributing to investor caution.

While traders largely expect a quarter-percentage point rate cut, mixed signals from policymakers about inflation and the labor market have created uncertainty. A recent Labor Department report showed marginally increased job openings but stagnant hiring, and the NFIB indicated plans for new job creation.

Market tensions heightened with a rally in U.S. Treasury yields, which dampened equity momentum. Despite overall market hesitation, tech shares saw volatility with U.S.-China trade tensions influencing Nvidia's chip sales and potential impacts in AI spending being scrutinized closely.

(With inputs from agencies.)