Stocks Retreat Ahead of Fed Decision and Key Remarks from Chair Powell

US stocks slipped on Wednesday as investors waited for the Federal Reserve’s highly expected quarter-point rate cut and fresh guidance on where policymakers see monetary policy heading next.

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By 9:32 a.m. in New York, the S&P 500 was down 0.1%, while the Nasdaq 100 dominated by technology and AI-linked names edged 0.3% lower. Later in the day, attention will shift to Oracle Corp.’s earnings report, a key update for traders watching the broader artificial intelligence narrative.

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Market pricing leaves little doubt that the Fed will trim its benchmark rate by 25 basis points at today’s meeting. What carries more weight, however, are the updated economic projections and Chair Jerome Powell’s tone during his press conference. Investors are eager to gauge how the central bank views the path of inflation, economic growth, and future interest-rate decisions.

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Recent volatility in equities has coincided with a gradual rise in Treasury yields. The 10-year note hovered around 4.19% in early trading. Michael Kantrowitz, chief investment strategist at Piper Sandler & Co., notes that over the last three years, U.S. stocks tend to underperform when the 10-year yield rises above roughly 4.25%. Any hint of hawkishness from Powell could “easily push” the 10-year toward that threshold, he wrote in a note to clients.

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Meanwhile, Oracle reporting after the closing bell faces growing scrutiny as AI-related companies confront higher capital-spending demands and skepticism around the structure of some AI partnerships. Today’s earnings update will serve as an important checkpoint for investors who are assessing whether the AI rally still has momentum.

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According to Citigroup Inc.’s trading strategy desk, traders are actually placing more weight on Oracle’s earnings than on the Fed decision itself. Citi strategist Vishal Vivek said options-implied moves for Oracle’s results along with next week’s employment and inflation data have surpassed those tied to today’s FOMC meeting. “The upcoming Oracle earnings has become almost as important as Nvidia’s earnings,” Vivek wrote, calling the company a new bellwether for assessing whether heavy AI capital spending is sustainable or drifting toward bubble-like territory.

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Despite this uncertainty, options traders largely remain confident that the AI rally is far from over. Activity in the derivatives market shows open interest in call options tied to the Magnificent Seven mega-cap tech companies sitting near its highest level since March 2023 when compared with put options. The skew suggests traders are preparing for more upside rather than a near-term pullback.

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Outside the tech-heavy options landscape, several single-stock stories also grabbed attention. Amazon.com Inc. announced plans to invest $35 billion in India over the next five years, signaling the company’s continued push into international markets and cloud infrastructure expansion. Shares of GE Vernova Inc. rallied after the company increased its share-repurchase authorization and doubled its dividend a move that underscored management’s confidence in its financial trajectory.

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In another major corporate development, SpaceX is moving forward with plans for what could become the largest initial public offering in history. People familiar with the matter said the space-exploration company is targeting a fundraising amount well above $30 billion, a figure that would surpass previous record-setting listings. The IPO, if executed as envisioned, would mark a milestone moment for private-market investors and could reshape sentiment around high-growth, space-related ventures.

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Overall, Wednesday’s market action reflects a fraught but cautiously optimistic backdrop. Investors are juggling rising Treasury yields, mixed earnings expectations, and a pivotal Fed decision all while continuing to assess the staying power of the artificial intelligence boom.

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The coming hours will bring clarity on monetary policy, but the broader market narrative remains grounded in tech leadership, corporate spending on AI, and shifting global investment flows. Whether Powell’s message soothes markets or sparks more volatility, traders appear convinced that the AI trade still has room to run, making Oracle’s results and upcoming economic data key catalysts as the week progresses.

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