Dow rises, S&P 500 and Nasdaq cautious at the open as Wall Street eyes Fed rate cut

US equities opened on a cautious note on Wednesday, with investors holding back big bets ahead of the US Federal Reserve’s much-anticipated decision on interest rates later tonight. The announcement is widely expected to mark the Fed’s first rate cut of 2025.

At the open, the S&P 500 inched up less than 0.1%, while the Nasdaq Composite slipped nearly 0.1%. The Dow Jones Industrial Average, however, gained close to 0.4%. On Tuesday, all three benchmarks had eased after touching record highs.

Markets are betting almost unanimously that the Fed will trim rates by 25 basis points at 11:30 PM IST, with CME FedWatch data showing a 96% probability for such a move and only a slim 4% chance of a larger cut.

The spotlight will then shift to the Fed’s “dot plot” (its officials’ projections for the path of rates) and to Chair Jerome Powell’s press conference scheduled for 12:00 AM IST (Thursday).

The backdrop includes a cooling labour market but also a recent pickup in inflation, leaving traders eager to see how aggressively policymakers may proceed with further easing.

The decision comes amid questions over the Fed’s independence. US President Donald Trump has repeatedly criticised Powell for delaying the rate cut.

Not just that, Trump is also gaining influence through new appointments. This week, Trump’s nominee Stephen Miran secured Senate confirmation, giving him voting rights immediately.

Meanwhile, Lisa Cook participated after a court rejected Trump’s attempt to remove her.

Among major stocks, Nvidia shares dropped about 2% in early trade after the Financial Times reported that Beijing has directed domestic tech majors to stop using the chipmaker’s AI processors. The move, citing three unnamed sources, weighed on sentiment for the global AI bellwether.

Also, ride-hailing firm Lyft surged nearly 30% in pre-market trade after announcing a partnership with Waymo, Alphabet’s self-driving unit. The collaboration will roll out robotaxis in Nashville by 2026.

Rival Uber saw its stock fall around 4% on the development.

Track the latest updates on the US Fed decision tonight with the CNBC-TV18 blog