Stocks hang near their records on Wall Street

U.S. indices were mostly higher Tuesday after Wall Street set new records and investor expectation grew that the Federal Reserve will announce its first interest rate cut of 2025.

S&P 500 futures rose 0.2% before the bell Tuesday while Big Tech stocks pulled Nasdaq futures 0.3% higher. Futures for the Dow Jones industrials were unchanged.

Oracle shares jumped 5% on speculation that it would play a major part in the U.S.-China deal to keep TikTok operating in the U.S. after the Trump administration announced the framework of a trade deal on Monday.

U.S. Treasury Secretary Scott Bessent said after the latest round of trade talks between the world’s two largest economies concluded in Madrid that U.S. President Donald Trump and Chinese Premier Xi Jinping would speak Friday to possibly finalize the deal. He did not disclose the terms of the agreement.

New York Times Co. fell 1% overnight after Trump filed a $15 billion defamation lawsuit against the newspaper and four of its journalists on Monday.

The lawsuit points to several articles and a book written by Times journalists and published in the lead up to the 2024 election as “part of a decades-long pattern by the New York Times of intentional and malicious defamation against President Trump.”

Shares of the family restaurant and arcade chain Dave & Buster's tumbled close to 16% after the company reported far lower second-quarter profits than Wall Street expected as comparable store sales declined 3% from the same period last year.

Outside of a smattering of earnings reports and corporate news, investors on Tuesday will closely examine the latest government data on retail sales in the U.S.

On Wednesday, the Fed will announce it latest decision on interest rates, with the unanimous expectation that the U.S. central bank will cut its rate for the first time this year. Such a move could kickstart a slowing job market.

Stocks have already run to records on the assumption that a cut result from the two-day meeting that begins Tuesday. Expectations are also high that the Fed will keep lowering rates through the end of this year and into 2026. That creates the possibility for disappointment in the market, which would mean falling stock prices, if the Fed doesn’t end up slashing rates as aggressively as traders expect.

That’s why more attention will be on what Fed Chair Jerome Powell says in his press conference following the decision than on the decision itself. Fed officials will also release their latest projections for where they see interest rates and the economy heading in upcoming years, which could provide another potential flashpoint.

The Fed has been cautious with rate cuts because it feared a possible jump in inflation due to of President Donald Trump’s tariffs. Lower interest rates can give inflation — which is already above the Fed's 2% target — more fuel and send it even higher.

Elsewhere, in Europe at midday the German DAX fell 0.5% while Britain's FTSE 100 dipped 0.3%. France’s CAC 40 was flat.

In Asia, Japan's benchmark Nikkei 225 came off a holiday to momentarily reach above 45,000 points a few times during the session, finishing at a record 44,902.27, up 0.3% from the previous close and the fourth straight session of record closes.

The rally comes despite ongoing political uncertainty in Japan after Prime Minister Shigeru Ishiba said he is stepping down. An election within the ruling Liberal Democratic Party to pick a new leader is expected Oct. 4. Candidates include Shinjiro Koizumi, the farm minister and son of former Prime Minister Junichiro Koizumi. Another is Sanae Takaichi, who could become Japan's first woman prime minister.

It's not clear if the chosen ruling party chief can become the nation's leader, as the party does not have a majority in Parliament and must forge a coalition with smaller parties.

Australia's S&P/ASX 200 edged up 0.3% to 8,877.70. South Korea's Kospi rose 1.2% to 3,449.62.

Hong Kong's Hang Seng reversed earlier declines, rising moderately before falling again to finish little changed at 26,438.51. The Shanghai Composite inched up less than 0.1% to 3,861.86.