The S&P 500 and Nasdaq opened higher on Tuesday as investors analysed a wave of earnings reports from major US companies and awaited the Federal Reserve‘s upcoming two-day policy meeting. In the early hours of trading, Dow Jones Industrial Average slipped slightly by 3.8 points, or 0.01%, to 44,833.74. Meanwhile, the S&P 500 rose 15.8 points, or 0.25%, to 6,405.62, and the Nasdaq Composite gained 108.1 points, or 0.51%, to 21,286.73.
As the Federal Reserve’s two-day policy meeting concludes Wednesday, markets widely expect the central bank to keep interest rates unchanged, despite months of pressure from President Donald Trump asking for rate cuts. Trump, who met with Fed Chair Jerome Powell last Thursday, said he is unlikely to attempt to remove Powell before his term ends in May.
The Fed last cut interest rates on December 18, 2024, reducing the federal funds rate by 25 basis points to a range of 4.25% to 4.50%. Since then, it has held rates steady, resisting Trump’s calls for further cuts. Most Fed officials believe the full economic impact of the Trump-era tariffs has yet to materialise, and they warn that an early rate cut could undermine ongoing efforts to bring inflation under control.
In recent months, the US has finalised trade agreements with major economies including Japan and the European Union, while negotiations with China and India are ongoing. These developments may influence the Fed’s assessment and future policy direction. At its previous meeting in June, the Fed revised its economic outlook, highlighting increased inflation risks linked to tariffs. The central bank now projects GDP growth at 1.4% for 2025, down 0.3 percentage points from its March estimate. Unemployment is expected to rise to 4.5% by year-end, while inflation is forecast to hit 3%, well above current levels. Despite headwinds, the US economy has shown strong resilience. However, with the tariff deadline extended to August 1 for several countries, the Fed may take a cautious approach until the longer-term effects become clearer.