Investor sentiment remained cautiously optimistic on Wall Street as markets opened slightly higher Tuesday, with attention sharply focused on the upcoming interest rate decision from the Federal Reserve. Meanwhile, ongoing conflict in the Middle East continued to influence global oil prices.

At the center of investor concerns is U.S. monetary policy, particularly whether the Federal Reserve will make any changes to its benchmark interest rate. For now, all signs point to the central bank maintaining its current policy stance, but markets are eagerly awaiting the Fed’s updated forecasts for both economic growth and future rate movements.

All three major U.S. stock indices posted modest gains at the open.
The Dow Jones Industrial Average climbed 0.7%, reaching 42,503 points.
The broader S&P 500 rose by 0.6%, standing at 6,017 points.
The tech-heavy Nasdaq Composite also gained 0.6%, hitting 19,646 points.

Yields on U.S. Treasury bonds remained stable ahead of the Fed’s announcement, reflecting investor confidence that no immediate policy shift is on the horizon.

Market analysts broadly expect the Fed to hold the federal funds rate steady within its current range of 4.25% to 4.50%, where it has remained since December 2024. However, there is considerable anticipation surrounding Fed Chair Jerome Powell’s remarks and the updated economic projections that will accompany the decision.

Economists suggest Powell will likely adopt a wait-and-see approach, particularly in light of new trade tensions sparked by tariffs proposed by former President Donald Trump. Many now predict the first rate cut could come as late as September, depending on how the broader economy responds to these developments.

“The economic landscape has shifted significantly since the Fed’s last meeting in early May,” said Jim Reid, Chief Analyst at Deutsche Bank. “Given the current level of uncertainty and the risk of renewed inflationary pressure, the Fed is expected to keep rates unchanged once again.”

The Federal Reserve’s dual mandate is to maintain maximum employment and ensure price stability. As inflation remains a lingering concern and geopolitical risks continue to mount, the Fed’s cautious stance underscores its commitment to navigating a complex economic environment without triggering further market volatility.