Wall Street Pulls Back Ahead of Fed Decision; Global Markets Mixed, Sector Rotation Evident

Investors locked in profits as major U.S. indexes retreated from record highs. Caution prevails ahead of the Fed's policy update, key earnings, and trade talks while global markets show mixed trends and sector performances diverge.

The Dow fell 204.57 points (0.5%) to 44,632.99, the Nasdaq declined 80.29 points (0.4%) to 21,098.29 and the S&P 500 dipped 18.91 points (0.3%) to 6,370.86.

Wall Street's pullback likely reflected profit-taking after a strong rally that pushed the Nasdaq and S&P 500 to record highs. Traders remained cautious ahead of Wednesday?s Federal Reserve policy announcement. While no rate change is expected, the Fed?s guidance could influence future rate outlooks.

In the coming days, focus will shift to the Labor Department?s monthly jobs report and earnings from key Magnificent Seven firms like Apple, Amazon, Microsoft, and Meta. Meanwhile, U.S.-China trade talks in Stockholm remain under close watch ahead of Friday?s ?reciprocal tariff? deadline. President Trump warned that countries without individual trade deals may face tariffs of 15 to 20% on exports to the U.S., heightening global trade tensions.

The Conference Board released a report showing consumer confidence in the U.S. saw a modest improvement in the month of July. It said that it?s consumer confidence index rose to 97.2 in July after falling to a revised 95.2 in June. The Labor Department released a separate report showing job openings in the U.S. decreased by slightly less than expected in the month of June.

Pharmaceutical stocks substantial moved downwards on the dragging, dragging the NYSE Arca Pharmaceutical Index down by 2.6%. Transportation stocks was significantly weak, as reflected by the 2.3% slump by the Dow Jones Transportation Average. Oil service and steel stocks too saw some weakness while commercial real estate, natural gas and utilities stocks strongly moved upwards.

Asia-Pacific stocks turned in another mixed performance Japan's Nikkei 225 Index slid by 0.8% while China's Shanghai Composite Index rose by 0.3%. The major European markets have all moved to the upside on the day. The German DAX Index jumped by 1.0%, the French CAC 40 Index advanced by 0.7% and the U.K.'s FTSE 100 Index climbed by 0.7%.

In the bond market, treasuries moved notably higher following the weakness seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 9 bps to 4.33%.

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