**Stocks Give Back Gains in Late Trading as Wall Street Watches Fed**
After an initial rally, stocks relinquished gains throughout the trading day on Tuesday. The Dow Jones Industrial Average and the S&P 500 hit record intraday highs before retreating to near their opening levels.
When the session concluded, the major indexes were mixed. The Dow slipped 15.90 points, or less than 0.1%, to close at 41,606.18. Conversely, the S&P 500 edged up by 1.49 points, or 0.1%, to 5,634.58, while the Nasdaq advanced 35.93 points, or 0.2%, to 17,628.06.
**Market Sentiment and Economic Indicators**
Early trading strength stemmed from optimism regarding interest rates, which waned as the session progressed. A Commerce Department report released later showed an unexpected modest increase in U.S. retail sales for August, causing stocks to end the day relatively unchanged.
The Commerce Department reported a 0.1% rise in retail sales for August, following a revised 1.1% surge in July. Economists had anticipated a 0.2% decline, compared to the initially reported 1.0% increase for the previous month.
While the positive retail sales data supported economic growth, it also reduced speculation that the Federal Reserve would enact a 50-basis-point rate cut in its upcoming monetary policy announcement.
"Despite concerns about the health of the U.S. consumer, recent data indicates resilience rather than a weakness that would justify a significant rate cut," said Danni Hewson, head of financial analysis at AJ Bell. "A 50-basis-point cut might signal worry and imply that the Fed has delayed action for too long, whereas a gradual approach suggests control and is less likely to be interpreted politically."
In another report, the Federal Reserve noted that U.S. industrial production rebounded more strongly than expected in August.
**Sector Performance**
Oil service stocks experienced substantial gains alongside rising crude oil prices, leading to a 3.2% jump in the Philadelphia Oil Service Index. Airline stocks also performed well, as indicated by a 2.5% increase in the NYSE Arca Airline Index, which reached its highest closing level in two months. Additionally, oil producers and computer hardware stocks showed notable strength. In contrast, pharmaceutical stocks lagged, pulling the NYSE Arca Pharmaceutical Index down by 1.3%.
**Global Markets**
In Asia-Pacific markets, trading results were mixed. Japan's Nikkei 225 Index fell by 1.0%, while Hong Kong's Hang Seng Index climbed 1.4%. European markets saw gains, with the U.K.'s FTSE 100 Index rising 0.4%, and both the German and French indexes increasing by 0.5%.
**Bond Market**
In anticipation of the Federal Reserve's announcement, U.S. treasuries moved slightly downward. Consequently, the yield on the benchmark ten-year note— which inversely relates to its price—rose by 2.1 basis points to 3.642%.
**Looking Ahead**
All eyes will be on the Federal Reserve's monetary policy decision and accompanying statement expected on Wednesday.
