BY COMFORT OGBONNA
The S&P 500 slipped slightly on Tuesday as investors grew cautious ahead of the Federal Reserve’s policy announcement, with expectations rising that the central bank may strike a hawkish tone even if it proceeds with a rate cut this week. Sentiment was further weighed down by a sharp decline in JPMorgan shares after the nation’s largest bank warned of significantly higher expenses projected for 2026.
The Federal Reserve began its two-day meeting on Tuesday, with markets largely expecting a quarter-percentage-point rate cut, even as inflation remains elevated above the Fed’s 2% target. Policymakers have issued conflicting signals in recent weeks—some warning that inflation could rebound, while others have expressed increased concern over the cooling labor market.
Fresh data from the Labor Department added to the uncertainty. Job openings ticked up slightly in October, but overall hiring remained soft. In a separate report, the National Federation of Independent Business noted that more companies plan to add workers in the coming months, suggesting pockets of resilience in the job market.
Jeff Schulze, head of economic and market strategy at ClearBridge, said the market appears to be leaning toward “a modestly less dovish Fed” following the job openings data. While traders still see an 87% chance of a 25-basis-point cut on Wednesday, Schulze noted that expectations have shifted toward a potential pause afterward.
Nervousness also grew as U.S. Treasury yields extended their recent climb. Justin Bergner, portfolio manager at Gabelli Funds, said the uptick in yields has added pressure on equities, especially with investors reluctant to make big moves ahead of the Fed’s announcement. The 10-year Treasury yield rose to 4.18%, marking its fourth straight day of gains.
By the closing bell, the Dow Jones Industrial Average dropped 179.03 points, or 0.38%, to 47,560.29. The S&P 500 slipped 6 points, or 0.09%, to 6,840.51, while the Nasdaq Composite gained 30.58 points, or 0.13%, to end at 23,576.49. The Russell 2000 reached an intraday record high before trimming gains to finish up 0.2%.
The S&P 500 bank index, which climbed nearly 1% earlier in the session, reversed course to fall 2% after comments from JPMorgan’s consumer and community banking chief Marianne Lake. She said the bank expects its expenses to surge to around $105 billion in 2026—largely due to growth and volume-related costs. The warning triggered a 4.7% drop in JPMorgan’s stock, its steepest decline since early April.
Across the S&P 500’s 11 sectors, five ended in the red. Energy led the gainers, rising 0.7%, while healthcare fell nearly 1%, marking the day’s overall weakest performer.
Tech stocks also saw uneven trading after President Donald Trump announced that Nvidia would be allowed to export its H200 processors—its second-most powerful AI chips—to China in exchange for a 25% fee on those shipments. Despite this development, reports indicated that Beijing is preparing to restrict access to advanced chips, while U.S. China-policy hardliners criticized the administration’s decision. Nvidia’s shares dipped 0.3%, and the Philadelphia semiconductor index ended marginally lower.
Investors are also awaiting earnings updates from major AI-linked companies, including Oracle and Broadcom, which could shed further light on corporate spending in the rapidly expanding AI infrastructure sector.
In entertainment and media, attention turned to a growing bidding war involving Paramount Skydance and Netflix over Warner Bros. Warner Bros shares rose 3.8%, while Paramount gained 0.5% and Netflix slipped 0.08%.
Elsewhere, Campbell Soup shares fell 5.2% after the company raised prices to offset rising costs, while AutoZone shares sank 7.2% after missing quarterly expectations. The two companies, along with JPMorgan, were the worst performers in the S&P 500 for the day.
Market breadth was generally positive. On the NYSE, advancing stocks outnumbered decliners by a 1.14-to-1 ratio, with 209 stocks hitting new highs. The Nasdaq saw a similar trend, with gainers outpacing losers by a 1.24-to-1 ratio as 2,642 stocks moved higher.
The S&P 500 recorded 17 new 52-week highs, and the Nasdaq Composite logged 100 new highs. Trading volume across U.S. exchanges totaled 14.50 billion shares, below the 20-session average of 17.34 billion, as many investors stayed on the sidelines ahead of Wednesday’s Fed decision.
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