Wall Street moved within a narrow range on Wednesday as investors awaited the Federal Reserve’s first policy decision under Chair Kevin Warsh. Chip stocks recovered from the previous session’s sell-off, while stronger retail sales data raised fresh questions about the path of interest rates.

The Dow Jones Industrial Average reached another intraday record before giving up part of its gain. Meanwhile, the S&P 500 and NASDAQ Composite shifted between small gains and losses as traders assessed movements in oil, bonds, and technology shares.

Chip Stocks Rebound After Previous Session’s Sell-Off

Semiconductor shares recovered as investors returned to several companies that had fallen sharply a day earlier. Broadcom, Micron Technology, Advanced Micro Devices, and Intel gained between 2.5% and 4% in early trading.

The Philadelphia Semiconductor Index rose about 3.5%, while the technology sector within the S&P 500 added 1.2%. Intel gained after starting production of its advanced 18A-P chip process. ASML also climbed as the wider semiconductor group recovered.

Other parts of the technology sector moved lower. Meta Platforms and Alphabet fell, weighing on communication services shares. Software companies also faced renewed selling, with Adobe, Salesforce, and Atlassian dropping between 1.2% and 2.3%.

SpaceX shares changed direction after rising earlier in the session. The stock later fell about 5%, ending a strong run following its initial public offering. Shares had gained around 40% from the $135 IPO price before Wednesday’s decline.

Investors Await Federal Reserve Interest Rate Decision

The Federal Reserve will announce its policy decision at 2 p.m. Eastern Time. Markets broadly expect officials to keep the federal funds rate within the current range of 3.50% to 3.75%.

Warsh will hold his first press conference as Fed chair at 2:30 p.m. Investors will focus on his comments about inflation, economic growth, employment and future rate moves. Policymakers must also assess the recent rise and fall in oil prices linked to the conflict involving Iran.

Traders expect the Fed to hold rates through much of 2026. Still, market pricing shows a nearly 43% chance of a quarter-point increase in December. Bets on cuts have weakened as inflation pressures and stronger economic data limit the case for easier policy.

Jeff Buchbinder, chief equity strategist at LPL Financial, said Warsh would likely avoid actions that could send long-term borrowing costs sharply higher. 

“The last thing that Warsh wants to do is send the 10-year yield sharply higher,” he said. Buchbinder added that any policy shift could become “a very long, drawn-out process,” as Warsh would need support from other committee members.

US Retail Sales Beat May Forecasts

Retail sales rose 0.9% in May, according to data from the Commerce Department’s Census Bureau. Economists had expected a 0.5% increase. April’s gain was revised lower to 0.4%.

The report showed that consumers maintained spending despite higher prices and tighter financial conditions. Nevertheless, some analysts expect growth to slow as larger tax refunds fade and households face rising living costs.

Stronger consumer spending may support economic activity, but it could also make the Fed more cautious about reducing rates. Policymakers have monitored demand closely as they seek to control inflation without placing too much pressure on employment.

The 10-year Treasury yield edged higher to about 4.43%. This level remained below 4.5%, which investors view as an important point for stocks, mortgages, and other borrowing costs.

Oil Prices Rise as US-Iran Deal Remains Uncertain

Oil prices moved higher after President Donald Trump said the proposed agreement with Iran was not yet final. West Texas Intermediate crude gained about 2% to trade near $78 per barrel, while Brent crude approached $80.

Trump said the United States could restart military action if the final agreement did not meet his terms. His statement added doubt after earlier reports suggested that both sides had ended military operations and planned to hold a signing ceremony in Switzerland.

Oil had dropped sharply earlier in the week after Trump announced a preliminary peace agreement. Lower energy prices eased some inflation concerns and supported stocks. However, the International Energy Agency said oil production and exports could take months to recover even if the agreement holds.

US crude inventories also recorded a steep weekly decline. Total crude stocks, including commercial supplies and the Strategic Petroleum Reserve, fell by 17.2 million barrels to 758.5 million. The Energy Information Administration said that was the lowest level since March 1985.

At 9:41 a.m. Eastern Time, the Dow rose 77.71 points, or 0.15%, to 52,070.81. The S&P 500 gained 0.11% to 7,519.49, while the NASDAQ Composite advanced 0.35% to 26,466.52. Trading later became mixed as investors waited for the Fed’s announcement.

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