Market Jitters as Fed Rate Cut Looms

In a day of turbulent trading, Wall Street's primary stock indexes closed lower as investors braced for an expected interest rate cut by the Federal Reserve. The anticipation of a 25 basis-point reduction seeks to combat the faltering U.S. labor market, despite a surprising uptick in August's retail sales.

Ross Mayfield of Baird Private Wealth Management noted that positive economic indicators strengthen the Federal Open Market Committee's hawkish stance, potentially leading Fed Chair Jerome Powell to adopt a bolder approach. The market largely ignored the confirmation of Stephen Miran to the Fed Board and an appeals court's rejection of Donald Trump's move against Fed Governor Lisa Cook.

The S&P 500 and Nasdaq reached new peaks earlier but closed lower amid falling subsectors, with utilities and real estate particularly hit. Notably, Nvidia's shares dropped due to diminished demand for its latest AI chip in China, adding to the Dow's losses.

(With inputs from agencies.)