Three major indices closed lower on Tuesday amid fluctuations, as investors cautiously waited for the Federal Reserve's interest rate cut decision.

On Tuesday, the U.S. stock market closed lower in volatile trading as investors remained cautious ahead of the Federal Reserve's upcoming interest rate decision and waited for a clear direction in the market. It is widely expected that the Fed will announce a 25 basis point rate cut after the two-day policy meeting in response to recent signs of weakening in the U.S. job market. The latest data showed that U.S. retail sales in August exceeded expectations, indicating that consumer demand remains resilient. However, analysts believe that this is not enough to change expectations of a rate cut by the Fed. Ross Mayfield, investment strategist at Baird Private Wealth Management, said, "Any resilient economic data will only strengthen the hawkish view within the FOMC and may even provide Fed Chair Powell with reason to adopt a more hawkish stance at the press conference than the market expects." In addition to economic data, political news failed to boost market sentiment. The Senate confirmed White House economic adviser Milan as a Fed governor on Tuesday, while an appeals court rejected President Trump's appeal to dismiss Fed governor Koch. All three major indexes closed lower, with the Dow Jones Industrial Average down 125.55 points, or 0.27%, at 45,757.90. The S&P 500 fell 8.52 points, or 0.13%, to 6,606.76, and the Nasdaq Composite dropped 14.79 points, or 0.07%, to 22,333.96. Of the 11 sectors in the S&P 500, 6 closed lower, with the utilities and real estate sectors leading the losses, down 1.81% and 0.66% respectively. Market fear rose slightly, with the CBOE Volatility Index (VIX) reaching its highest level in over a week at 16.04. As for individual stocks, UnitedHealth Group Incorporated (UNH.US) fell 2.3%, becoming the biggest drag on the Dow. NVIDIA Corporation (NVDA.US) fell 1.6% after reports that demand for its latest AI chip in the Chinese market was weak. On the other hand, Webtoon Entertainment (WBTN.US) soared 39% after announcing a partnership with Walt Disney Company (DIS.US) to launch a new digital comic platform featuring popular IP content like Marvel and "Star Wars." Oracle Corporation (ORCL.US) rose 1.5% following Trump's announcement of a deal for TikTok to remain operational in the U.S. Several media reports indicated that Oracle Corporation would be part of the consortium investing in TikTok's U.S. operations. Despite the decline on Tuesday, both the S&P 500 and Nasdaq reached new intraday and closing highs on Monday. September is typically considered a weak month for U.S. stocks, but all three major indexes have recorded gains so far this month. Total U.S. stock market volume on Tuesday was 17.11 billion shares, higher than the 20-day average of 16.31 billion shares. Against the backdrop of expectations for a Fed rate cut, the average 30-year fixed mortgage rate in the U.S. fell sharply by 12 basis points to 6.13% on Tuesday, the lowest level since the end of 2022. Matthew Graham, CEO of Mortgage News Daily, said that the current market situation is similar to September 2024, when the market reacted ahead of the anticipated rate cut but rates unexpectedly rose after the cut was announced. Willy Walker, CEO of Walker & Dunlop, noted that in the nine rate-cut cycles since 1980, long-term rates only significantly declined when the economy was in recession. Given the current non-recessionary environment, even if the Fed cuts rates by 25 basis points this time and again in the future, the impact on long-term rates will be limited. Walker predicts that after the Fed announces rate cuts, the 10-year Treasury yield may rise slightly, and the market may exhibit a typical "buy the rumor, sell the fact" trend.