Wall Street Waits on Fed Decision as US Stocks Plummet
US stocks experienced mixed trading on Tuesday as investors awaited the Federal Reserve's decision on interest rates. The S&P 500 slipped 0.2%, while the Dow Jones Industrial Average dropped 289 points, or 0.6%. The Nasdaq composite fell 0.3%.
The main event for the market is Wednesday's Fed announcement, with widespread expectations that it will hike the federal funds rate to combat inflation above 3%. A rate increase would make borrowing more expensive and potentially impact the economy in the short term.
Bond yields rose to 5.00% from 4.97%, a level not seen since 2023. This has led to investors becoming less willing to pay premium valuations for stocks, as they can earn higher returns from bonds.
Nvidia and other AI-related companies experienced some stability following Monday's declines after industry leaders called for a slowdown in development due to safety concerns. Nvidia rose 1.1%, while Advanced Micro Devices climbed 2.4%.