Dow drops, S&P 500 and Nasdaq slip from records as Wall Street counts down to Fed decision

US stocks retreated from record highs on Tuesday as investors focused on Wednesday’s Federal Reserve rate decision.

The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) slipped about 0.1%. The Dow Jones Industrial Average (^DJI) dropped more than 100 points, or roughly 0.2%.

Investors turned their attention to Wednesday’s highly anticipated Fed rate decision following a two-day meeting that kicked off on Tuesday. The market widely anticipates policymakers cutting interest rates by 25 basis points.

Oil prices jumped 1% on Tuesday as investors assessed the threat to Russian energy supplies following Ukrainian drone attacks on refineries and the impact a potential Federal rate cut decision could have on demand.

West Texas Intermediate (CL=F) futures surpassed $64 per barrel, while Brent (BZ=F) futures rose above $68 per barrel.

Ukraine upped its attacks on Russian ports and energy infrastructure, prompting supply shock worries.

Meanwhile, investors expect the Federal Reserve to cut interest rates by at least 25 basis points on Wednesday following its two-day policy meeting, potentially spurring demand from increased economic activity.

Despite a recent rise in oil prices, WTI and Brent are down about 9% and 8%, respectively, year to date.

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Hims & Hers (HIMS) shares dropped 7% Tuesday after the US Food and Drug Administration posted a warning letter sent to the company on Sept. 9 stating that it made false or misleading claims in its marketing of its compounded semaglutide products.

The FDA’s public posting of the letter comes after the New York Times obtained a copy and reported some of the details last week.

Hims & Hers stock has had a volatile year, but shares are up roughly 107% in 2025. In June, the stock suffered after Danish pharmaceutical giant Novo Nordisk (NVO) ended its partnership with HIMS, accusing the company of “deceptive” marketing.

HIMS is one of the top ten most shorted stocks in the US, according to an S&P Global Market Intelligence Data, with some 30% of the company’s shares currently sold short.

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Shares of Klarna (KLAR) rose as much as 4% Tuesday before paring gains as Wall Street analysts initiated coverage of the Swedish buy now, pay later leader following its successful debut on the New York Stock Exchange last week.

Analysts at Needham and Morningstar initiated coverage of Klarna with Hold ratings, while Compass Point Research analyst Dominick Gabriele began covering the stock with a Buy rating.

Gabriele wrote in a note to clients Monday that the buy now, pay later (BNPL) space “has high volume growth rates” as payments become digitized.

He said that given BNPL industry growth combined with “numerous company specific opportunities, including Klarna penetrating further into the US,” he expects the company to outperform its peers.

“As Klarna pushes into the US they are likely to be a market share taker against current BNPL US incumbents both in Pay Later and longer duration BNPL products,” Gabriele wrote.

Klarna was up nearly 1% in midday trading as the major stock indexes reversed earlier gains.

Warner Bros. Discovery (WBD) shares sank 8% Tuesday following downgrades from TD Cowen and MorningStar analysts to Hold from Buy on Monday, per Bloomberg data.

TD Cowen analyst Douglas Creutz said the stock has risen “well beyond our $14 price target following last week’s unsubstantiated report that Paramount SkyDance (PSKY) may be considering a bid for the company.”

Warner Bros. shares spiked close to 50% in just two trading days last week after a Wall Street Journal report said Paramount Skydance was preparing a majority-cash bid for the media conglomerate — a potential move that could set off a Hollywood bidding war and reshape the global streaming landscape, Yahoo Finance’s Allie Canal reported.

Creutz pointed to “the speculative nature of the current [WBD stock] rally and the elevated risk profile at these levels.”

Creutz said that while a Paramount Skydance offer for the company “may come in … we don’t love the risk-reward here given the potential for WBD shares to quickly round trip to $11-$12 if the bid doesn’t materialize.”

Ralph Lauren (RL) shares fell more than 1% Tuesday as the fashion company gave a three year financial outlook that disappointed investors.

The company said in an update Tuesday that it sees revenue growing in the mid-single digits over the next three years. Ralph Lauren reported revenue rising roughly 6.8% to nearly $7.1 billion in its 2025 fiscal year. That’s after climbing about 3% to just over $6.6 billion in the previous year.

“The Company’s outlook is based on its best assessment of the current geopolitical and macroeconomic environment, including inflationary pressures, tariffs and other consumer spending-related headwinds, global supply chain disruptions and foreign currency volatility, among other factors,” it said in the statement.

Shares in Ralph Lauren are up 34% in 2025.

Tesla (TSLA) and Amazon (AMZN) led the “Magnificent Seven” tech stocks as the Nasdaq Composite (^IXIC) pulled back from a record high.

Tesla jumped nearly 2% after turning positive for the year Monday. That gain came despite news Tuesday that the EV maker faces another probe from US auto safety regulators, this time over whether some of its doors are defective.

Amazon climbed more than 1% as the e-commerce giant announced its October Prime Day sales dates. Apple (AAPL) share edged up 1% as its latest watches were set to hit the market later this week.

Nvidia (NVDA), Microsoft (MSFT), and Alphabet (GOOGL, GOOG) fell fractionally.

Oracle (ORCL) stock rose nearly 3% on Tuesday after CBS News reported that the company will be among a consortium of firms that are part of the preliminary US-China deal to enable TikTok to continue operations.

Meanwhile, CNBC reported that the two countries’ agreement would allow Oracle to continue its current cloud deal with TikTok. Oracle’s servers are used to store TikTok’s American user data, part of an initiative called Project Texas, launched by TikTok around 2022.

Treasury Secretary Scott Bessent said at a press conference Monday that the US and China agreed on a framework for a TikTok deal during trade talks in Madrid, ahead of a US ban of the social media app. Trump and Chinese President Xi Jinping are set to speak on Friday to “complete” the agreement.

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As gold (GC=F) continued to climb to new records, it surpassed $3,700 an ounce for the first time Tuesday after the asset saw an all-time high of around $3,685 an ounce Monday.

The jump puts gold up 44% for the year, just as the US Dollar (DX=F) fell, sinking to a four year low against the euro.

The moves come ahead of the Federal Reserve’s highly anticipated policy meeting Wednesday, when the central bank is widely expected to cut interest rates. Traders were pricing in 96% odds of a 25 basis point cut Tuesday and a 4% chance of a jumbo cut, unchanged from the previous day, according to CME Group.

Novo Nordisk stock rose more than 2% Tuesday as the Ozempic and Wegovy maker said it plans to apply for US approval for a high-dose obesity shot.

Novo Nordisk chief scientific officer Martin Holst Lange remarked on the company’s plans to seek approval from the Food and Drug Administration for the high dose version of its weight loss shot Wegovy during the European Association for the Study of Diabetes conference in Vienna, Bloomberg reported.

Also boosting shares, the Danish drugmaker’s medication for diabetes, Rybelsus, became the first pill version of a GLP-1 drug approved by European regulators to reduce the risk of cardiovascular disease, Barron’s reported Monday.

Even with Tuesday’s gain, shares in the pharmaceutical giant are down 34% for the year.

The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) nudged higher on Tuesday after climbing to fresh records during the previous trading session.

The benchmark S&P 500 edged less than 0.1% higher at the open, and the Nasdaq(^IXIC) rose around 0.2%. The Dow Jones Industrial Average (^DJI) fell more than 0.1%.

The gains Tuesday come after the Senate confirmed President Trump’s pick, Stephen Miran, as a Federal Reserve board governor and a retail sales update showed consumers staying resilient despite a weakening labor market and continued inflation.

Americans just keep spending.

Retail sales in August rose 0.6% from the prior month, more than the 0.2% expected and the latest sign that US consumers continue to be resilient in the face of a labor market that has shown some signs of stress.

Excluding spending on cars and gas, sales rose 0.7% last month.

The largest category increases were seen in spending at clothing stores and nonstore retailers — which captures e-commerce spending — suggesting a strong back-to-school shopping season. The retail sales data is not adjusted for inflation.

“Net, net, the consumer hasn’t pulled the plug on the economy yet,” said Chris Rupkey, chief economist at FWDBONDS, “and until they do, growth will continue to chug along at a moderate pace that seems to defy gravity in the face of rising tariff costs and store-bought prices.”

US Treasurys are leading global bond markets this year as expectations of a Federal Reserve rate cut overturn bearish sentiment.

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