Stocks fell as energy bucked a lower tape: Tuesday recap

The major U.S. stock indexes closed lower on Tuesday, a second straight decline as traders held back ahead of the Federal Reserve. The S&P 500 eased 0.46% to 7,585.73. The Dow Jones Industrial Average fell 328 points, or 0.62%, to 52,093.11. The tech-heavy Nasdaq Composite gave up 0.65% to 25,981.57, the steepest slide of the three headline gauges. The declines were modest. Trading stayed orderly through the session, and all three benchmarks are now lower on the week.

Under the surface, the day split along familiar lines. Energy was the clear leader, with the sector fund up 2.17% and well ahead of everything else. Materials added 0.48%. From there the map leaned red. Consumer discretionary was the weakest group, down 1.75%, followed by utilities at 1.20% lower as elevated bond yields kept pressure on rate-sensitive corners of the market. Communication services slipped 0.90% and industrials fell 0.64%. Technology and financials held up better, easing 0.29% and 0.32%, while health care finished little changed. Nine of the eleven S&P 500 sectors ended the day lower. The weekly picture is sharper. Utilities have shed nearly 5% over the past five sessions and industrials more than 3%, while communication services has led the week with a gain of better than 2%.

The pull traced back to the Federal Reserve. Policymakers opened a two-day meeting, with the interest-rate decision due Wednesday afternoon, and investors trimmed exposure into the event. Markets widely expect a quarter-point increase to a 3.75%–4.00% range, which would be the first rate hike since 2023. Treasury yields did nothing to ease the mood. The 10-year note held at 4.96%, near its highest levels in years, a backdrop that tends to weigh on rate-sensitive groups such as utilities and real estate. The day’s data reinforced the caution. The New York Fed’s Empire State manufacturing index dropped to 7.6 in September from 20.6 in August, well below the 14.75 reading economists had forecast, a sign that factory activity in the region cooled sharply this month. The survey’s measures of input and selling prices kept climbing, a reminder that cost pressure has not gone away.

Breadth told the same story. Small caps lagged. The Russell 2000 fund fell 0.96%, a deeper cut than the large-cap benchmarks, and it has now given up more than 3% for the week, the kind of move that shows up when higher borrowing costs are front of mind. Even so, there was little sign of panic. The Cboe Volatility Index sat at 17.2, barely changed on the day and a level that reads as caution rather than fear.

The calendar turns busy from here. The Fed’s rate decision, its updated economic projections, and the chair’s press conference all land on Wednesday. August retail sales arrive the same morning, offering a fresh read on whether households kept spending as borrowing costs rose. Housing starts and building permits follow later in the week, giving investors a look at how higher mortgage rates are filtering through to construction. Rate policy and the health of the consumer will shape the tone into the weekend.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.