Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed in negative territory on Tuesday ahead of the Fed interest rate decision tomorrow at 2 p.m. Eastern Time. The central bank is expected to start its rate cutting cycle with a 25 bps cut, which would be the first since December 2024.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Despite historically elevated rates, U.S. consumers continue to spend. August’s retail sales grew by 0.6% month-over-month, shattering the estimate of 0.2%. Excluding volatile items like autos and gas, retail sales increased by 0.7%, also above the estimate of 0.5%. However, these sales could come under pressure from cracks in the labor market and the risk of inflation.
“Households still generally have the means to spend, but growing concerns over the labor market suggest that we will likely see a pullback in the pace of spending growth for the remainder of the year,” warned Wells Fargo senior economist Sam Bullard.
Meanwhile, President Trump extended the TikTok ban deadline for the fourth time since January, signing an executive order that provides parent company ByteDance with a new deadline of December 16 to divest its U.S. operations. The popular short video app was previously scheduled to be banned tomorrow, September 17. However, substantial progress was made in the fourth round of in-person U.S.-China trade talks led by U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng in Madrid, leading to a framework deal.
“We’ve got a deal on TikTok. I’ve reached a deal with China. I’m going to speak to President Xi [Jinping] on Friday to confirm everything,” Trump said on Tuesday morning to reporters outside of the White House.
According to the Wall Street Journal, the deal will allow a new U.S. entity consisting of Oracle (ORCL) and private equity firms Silver Lake and Andreessen Horowitz to take control of TikTok U.S. The entity’s board would be American-dominated, with one director appointed by the government. U.S. investors would own 80% of the entity, while ByteDance would control the remaining 20%.
A U.S.-China trade deal could be on the horizon as well, with Bessent telling CNBC that negotiations have become “more and more productive.” The U.S. tariff pause on Chinese imports is set to expire on November 10, although the two countries will likely meet again before then.
The S&P 500 (SPX) closed with a 0.13% loss, while the Nasdaq 100 (NDX) fell by 0.08%.
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.