Stock Market Edges Lower as Investors Await Fed's Policy Decision; Cryptocurrencies Outperform

The stock market edged lower by midday Tuesday as investors treaded cautiously ahead of the Federal Reserve's policy decision scheduled for Wednesday. Although a rate cut appeared widely priced in—with Fed Funds futures assigning a 96% probability—investors are fully focused on the Fed's forward guidance and Chair Jerome Powell‘s remarks

Major U.S. stock indices edged lower by midday Tuesday, tracking a weak start to the session, as investors treaded cautiously ahead of the Federal Reserve’s policy decision.

Although a rate cut appeared widely priced in — with Fed Funds futures assigning a 96% probability to the move — investors are fully focused on the Fed's forward guidance and Chair Jerome Powell‘s remarks, particularly in light of recent robust economic data.

November's retail sales data showed an unexpected rebound, rising 0.7% month-over-month, surpassing expectations of 0.5%. On an annual basis, sales climbed 3.8%, marking the fastest pace since December 2023, driven by strong auto sales growth.

Semiconductor stocks led the downturn amid renewed geopolitical tensions following reports that China is broadening antitrust scrutiny on U.S. chipmakers’ acquisitions in recent years.

Last week, Beijing launched an investigation into Nvidia Corp.'s 2019 acquisition of Mellanox Technologies. The U.S. antitrust authorities had approved the deal without any conditions.

The iShares Semiconductor ETF (NYSE:SOXX) declined 1.5%, weighed down by sharp losses in major chip stocks. Broadcom Inc (NASDAQ:AVGO) dropped over 5%, while Marvell Technology Inc (NASDAQ:MRVL) plunged over 8%.

By midday, the major U.S. indices were in negative territory. The S&P 500 slipped 0.4%, the Dow Jones Industrial Average fell 0.6%, and the Nasdaq 100 declined 0.4%.

Both the U.S. dollar and Treasury yields remained steady, reflecting cautious positioning by institutional investors.

In commodities, gold dipped 0.3%, while natural gas and oil prices fell 2% and 1%, respectively, signaling continued weakness in the energy sector.

Cryptocurrencies continued to outperform, with Bitcoin (CRYPTO: BTC) rising 1.3% to cross $107,000. Among other cryptocurrencies, BTC rose 1.3% to surpass $107,000, reaching a market capitalization of $2.13 trillion. The total cryptocurrency market value rose to $3.68 trillion, a new record high.