The S&P 500, tracked by the SPDR S&P 500 ETF Trust (SPY), climbed to fresh record highs during Tuesday morning trading. The index closed the day up 0.04%, marking its seventh consecutive day of gains. This strong performance comes just ahead of the Federal Reserve’s highly anticipated interest rate decision, which is expected on Wednesday at 2:00 p.m. ET.
The S&P 500’s positive momentum aligns with other major indices. The Invesco QQQ Trust, Series 1 (QQQ), which tracks the tech-heavy Nasdaq, and the SPDR Dow Jones Industrial Average ETF (DIA) both closed relatively flat for the day. However, small-cap stocks outperformed their larger counterparts, as the iShares Russell 2000 ETF (IWM) finished 0.8% higher.
As policymakers gather for the two-day Federal Open Market Committee (FOMC) meeting, market expectations about the interest rate decision remain mixed. CME FedWatch data indicates a 65% chance of a 50-basis-point rate cut and a 35% chance of a smaller 25-basis-point cut. This level of uncertainty is unusual on the eve of a Fed decision.
Expectations for a larger rate cut have declined slightly after August retail sales came in stronger than anticipated. Retail sales increased by 0.1% month-over-month, decelerating from July’s robust 1.1% growth but exceeding forecasts of a 0.2% decline. The unexpected strength in consumer spending has cast some doubt on the need for a significant rate cut to support the economy.
While an overwhelming consensus among Wall Street analysts anticipates a 25-basis-point cut, JPMorgan Chase stands as an outlier, predicting a 50-basis-point reduction. The coming days will reveal the Fed’s ultimate decision and its impact on the markets.
Here are the top 5 S&P 500 stocks for Tuesday:
| Name | Sector | 1-day Return (%) |
|—|—|—|
| Enphase Energy, Inc. (ENPH) | Information Technology | 6.32 |
| Hewlett Packard Enterprise Company (HPE) | Information Technology | 5.66 |
| Moderna, Inc. (MRNA) | Health Care | 4.05 |
| Synchrony Financial (SYF) | Financials | 4.00 |
| United Rentals, Inc. (URI) | Industrials | 3.95 |
| Airbnb, Inc. (ABNB) | Consumer Discretionary | 3.86 |
