Looming Fed Announcement May Lead To Choppy Trading On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction after ending the previous session mostly higher.

Traders may be reluctant to make significant moves as the Federal Reserve's two-day monetary policy meeting gets underway.

While the Fed is widely expected to lower interest rates by 25 basis points, traders will look to the accompanying statement as well as officials' latest economic projections for clues about the outlook for rates.

CME Group's FedWatch Tool is currently indicating a 96.0 percent chance the Fed will cut rates by a quarter point and a slim 4.0 percent chance of a half-point rate cut.

The Fed is widely expected to lower rates by another 25 basis points at both its October and December meetings, although Fed Chair Jerome Powell is likely to say future rate cuts will depend on incoming economic data.

The futures remained little changed even after the Commerce Department released a report showing retail sales rose by much more than expected in the month of August.

The Commerce Department said retail sales climbed by 0.6 percent in August, matching an upwardly revised increase in July.

Economists had expected retail sales to inch up by 0.2 percent compared to the 0.5 percent growth originally reported for the previous month.

Stocks moved mostly higher during trading on Monday, adding to the strong gains posted last week. With the continued upward move, the Nasdaq and the S&P 500 reached new record closing highs.

The Nasdaq jumped 207.65 points or 0.9 percent to 22,348.75 and the S&P 500 climbed 30.99 points or 0.5 percent to 6,615.28. The narrower Dow posted a more modest gain, inching up 49.23 points or 0.1 percent to 45,883.45.

The strength on Wall Street came following positive comments from President Donald Trump about trade talks between top U.S. and Chinese officials in Europe.

In a post on Truth Social, Trump said that the talks have "gone VERY WELL!" adding that a "deal was also reached on a 'certain' company that young people in our Country very much wanted to save," likely referring to Chinese-owned social media platform TikTok.

Trump also said that he will be speaking with Chinese President Xi Jinping on Friday and described the relationship as "a very strong one."

Meanwhile, traders also continued to look ahead to the Federal Reserve's monetary policy announcement on Wednesday.

With recent data showing relatively subdued inflation and a weakening labor market, the Fed is widely expected to lower interest rates by at least a quarter point.

Computer hardware stocks turned in some of the market's best performances on the day, with the NSYE Arca Computer Hardware Index surging by 2.5 percent to a record closing high.

Significant strength was also visible among networking stock, as reflected by the 2.3 percent jump by the NYSE Arca Networking Index.

Gold, steel and software stocks also saw considerable strength, while airline, oil service and housing stocks showed notable moves the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.63 to $63.93 a barrel after rising $0.61 to $63.30 a barrel on Monday. Meanwhile, after surging $32.60 to $3,719 an ounce in the previous session, gold futures are inching up $8.70 to $3,727.70 an ounce.

On the currency front, the U.S. dollar is trading at 147.18 yen compared to the 147.40 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1796 compared to yesterday's $1.1796.

Asia

Asian stocks rose broadly on Tuesday in anticipation of a Federal Reserve rate cut when the U.S. central bank announces its monetary policy decision on Wednesday.

Fed officials will also release their quarterly update of economic and rate forecasts on Wednesday, and Fed Chair Jerome Powell will hold his regular post-decision press conference, as concerns about a softening labor market take precedence over sticky inflation.

The focus was also on ongoing U.S.-China talks, with reports suggesting that Washington has reached a "framework" deal with China on TikTok's U.S. operations.

In addition, U.S. Treasury Secretary Scott Bessent stated that the Trump administration would hold off on new tariffs on Chinese goods related to Russian oil purchases, pending substantial tariff actions from European countries.

China's Shanghai Composite Index finished marginally higher at 3,861.86 after a choppy session. Hong Kong's Hang Seng Index ended little changed with a negative bias at 26,438.51, giving up early gains.

Japanese markets eked out modest gains to close at a record high for a fourth day running, led by gains in the chip sector.

The Nikkei 225 Index gained 0.3 percent to close at 44,902.07, while the broader Topix Index settled 0.3 percent higher at 3,168.36.

Wafer maker Sumco jumped more than 9 percent, while Tokyo Electron, Resonac Holdings and Disco Corp climbed 2-8 percent.

Seoul stocks rose sharply to set a new record high for the fifth consecutive session as blue-chip tech shares like Samsung Electronics and SK Hynix soared 4-5 percent on expectations for the South Korean government's policy road map aimed at fostering advanced industries. The Kospi jumped 1.2 percent to 3,449.62.

Australian markets ended modestly higher as energy and mining stocks surged, more than offsetting losses in the healthcare sector.

The benchmark S&P/ASX200 Index rose 0.3 percent to 8,877.70, while the broader All Ordinaries Index closed up 0.3 percent at 9,151.20.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index inched up 0.2 percent to 13,234.89 ahead of key central bank decisions due this week, including in the U.S., Britain, Japan and Canada.

Europe

European stocks are mostly lower on Tuesday and the U.S. dollar has slipped to an over two-month low ahead of the start of a two-day policy meeting of the Federal Reserve later in the day, with traders eyeing a widely expected 25 basis point rate cut.

In economic news, the U.K. jobless rate remained unchanged and average earnings growth slowed in the three months to July, the Office for National Statistics said.

The unemployment rate was at 4.7 percent in the three months to July, unchanged from the previous period.

Average earnings excluding bonuses increased 4.8 percent in May to July, which was down from 5.0 percent in the previous three-month period and matched expectations.

In August, payroll employment decreased 127,000 from the previous year and by 8,000 from the previous month to 30.3 million.

The German DAX Index is down by 0.7 percent, the U.K.'s FTSE 100 Index is down by 0.3 percent and the French CAC 40 Index is down by 0.1 percent.

Online review platform Trustpilot has soared in London after delivering both top-line growth and improved profitability in the first half of 2025 and launching a new share buyback program.

Anglo American has also risen. The mining giant has signed a definitive agreement with Codelco to coordinate operations at Los Bronces and Andina in Chile.

Hochschild Mining has also moved to the upside as it announced the appointment of Cassio Diedrich as Chief Operating Officer.

Meanwhile, hiring firm SThree has plummeted after forecasting annual pre-tax profit well below market expectations.

U.S. Economic News

The Commerce Department released a report on Tuesday showing retail sales in the U.S. rose by much more than expected in the month of August.

The report said retail sales climbed by 0.6 percent in August, matching an upwardly revised increase in July. Economists had expected retail sales to inch up by 0.2 percent compared to the 0.5 percent growth originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales grew by 0.7 percent in August after rising by an upwardly revised 0.4 percent in July.

Ex-auto sales were expected to climb by 0.4 percent compared to the 0.3 percent increase originally reported for the previous month.

A separate report released by the Labor Department on Tuesday showed import prices in the U.S. unexpectedly increased in the month of August.

The Labor Department said import prices rose by 0.3 percent in August after inching up by a downwardly revised 0.2 percent in July.

Economists had expected import prices to edge down by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the report said export prices climbed by 0.3 percent in August, matching an upwardly revised increase in July.

Economists had expected export prices to come in unchanged compared to the 0.1 percent uptick originally reported for the previous month.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of August. Industrial production is expected to come in unchanged in August after edging down by 0.1 percent in July.

The National Association of Home Builders is due to release its report on homebuilder confidence in the month of September at 10 am ET. The housing market index is expected to inch up to 33 in September after slipping to 32 in August.

Also at 10 am ET, the Commerce Department is scheduled to release its report on business inventories in the month of July. Business inventories are expected to rise by 0.2 percent in July, matching the increase seen in June.

The Treasury Department is due to announce the results of this month's auction of $13 billion worth of twenty-year bonds at 1 pm ET.