Major United States equity benchmarks ended Tuesday’s session (Wednesday AEDT) in mixed territory, with the S&P 500 touching a fresh intraday record high as gains in large-cap technology shares offset weakness in healthcare, while investors positioned for key corporate earnings and the Federal Reserve’s latest policy decision.
The S&P 500 index rose 28.4 points or 0.4% to 6,978.6, supported by strength in Big Tech names, while the Nasdaq Composite advanced 215.7 or 0.9% to 23,817.1.
In contrast, the Dow Jones Industrial Average fell 409.0 points or 0.8% to 49,003.4, weighed down heavily by a 19.6% slide in UnitedHealth.
Earnings season remains a central focus, with more than 90 S&P 500 companies due to have reported results by the end of the week.
Meta Platforms, Microsoft and fellow “Magnificent Seven” member Tesla are all scheduled to report on Wednesday (Thursday AEDT), while Apple is set to release its results on Thursday (Friday AEDT).
Despite the recent rally, concerns over stretched valuations in artificial intelligence-linked stocks linger. Those worries weighed on key technology names toward the end of last year and contributed to broader market unease amid fears that enthusiasm around the AI theme may have driven a potential bubble.
Healthcare shares were among the weakest performers on Tuesday. Several large health insurers tumbled after the Centers for Medicare & Medicaid Services proposed increasing payments to Medicare Advantage insurers by a net average of just 0.09% in 2027.
Shares of Humana dropped 21.1%, while CVS Health fell 14.2%, amplifying the Dow’s decline.
On the economic front, the Conference Board’s Consumer Confidence Index fell to 84.5 from a revised 94.2, marking the lowest level since 2014.
From the data release: “The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—dropped by 9.9 points to 113.7 in January. The Expectations Index—based on consumers’ short-term outlook for income, business, and labour market conditions—fell by 9.5 points to 65.1, well below the threshold of 80 that usually signals a recession ahead.”
According to Dana M Peterson, Chief Economist at The Conference Board: “Confidence collapsed in January, as consumer concerns about both the present situation and expectations for the future deepened. All five components of the Index deteriorated, driving the overall Index to its lowest level since May 2014 (82.2)—surpassing its COVID-19 pandemic depths.”
Attention now turns to the Federal Reserve’s first policy decision of the year, due on Wednesday (Thursday AEDT). The central bank is widely expected to leave its key interest rate unchanged within a target range of 3.5% to 3.75%, though investors will scrutinise the statement and press conference for signals on the timing of any future rate cuts.
ANZ analysts noted: "In our view, an extended pause is not warranted. We see evidence that disinflation momentum is building. The labour market is weakening and wage growth is moderating, which alongside robust productivity growth signals the labour market is no longer a source of excess inflation.
"There is little evidence to suggest tariff-related impacts on core goods inflation are persistent. Shelter inflation continues to moderate and forward indicators suggest that will continue for some time.
“Inflation is elevated but we expect it to moderate over 2026. Downside risks to the labour market pose the greater threat to the Fed’s ability to meet its dual mandate in our view.”
Market pricing in Fed funds futures continues to indicate the possibility of two quarter-point rate cuts by the end of 2026, according to the CME FedWatch Tool.
In fixed income markets, U.S. Treasury yields were mixed. The 10-year yield rose 0.4% to 4.231%, while the 2-year yield fell 0.6% to 3.571%.
