U.S. stocks end flat ahead of Fed rate-cut decision

STORY: U.S. stocks closed nearly unchanged on Tuesday as investors braced for the Federal Reserve interest-rate decision on Wednesday.

The Dow and S&P 500 ended essentially flat, while the Nasdaq added two-tenths of a percent.

The S&P 500 touched a record high earlier in the session, after an unexpected rise in August retail sales eased worries of a sharp economic slowdown.

Still, markets were pricing in a more than 60% chance that the Fed will cut borrowing costs by 50 basis points at the end of its two-day meeting on Wednesday, according to the CME's FedWatch Tool.

That's a shift from just last week, when most traders were betting on a smaller 25-basis-point cut.

George Cipolloni is portfolio manager at Penn Mutual Asset Management.

"I think the reason why stocks are flat today is exactly because of that, that the Fed is going to make a huge announcement and people aren't sure what to do right now. Again, there's a ton of uncertainty around this decision [on an interest rate cut]. And so longer term, I, personally, as an investor, don't really think it matters whether it's 25 or 50 [basis point rate cut]. But in the short term, I definitely think we are set up to see some volatility again if the market's disappointed or not, tomorrow."

Stocks on the move included Intel, which gained 2.7% after signing Amazon's cloud-services unit as a customer to make custom AI chips. Amazon shares added one percent.

Sticking with AI, shares of semiconductor powerhouse Nvidia shed one percent.

And shares of Microsoft gained after the tech giant's board approved a new $60-billion share-buyback program and hiked its quarterly dividend by 10%.