Stocks Trade Cautiously Ahead of Fed Decision as Oil Prices Climb

U.S. equities delivered a restrained performance as investors navigated rising oil prices and positioned cautiously ahead of the Federal Reserve’s policy decision. The S&P 500 gained 0.3%, the Nasdaq Composite rose 0.5%, and the Dow Jones Industrial Average edged higher, though all three indices finished well off their session highs.

Energy markets remained a central focus. Crude oil prices moved higher after reports that Iran struck a natural gas facility in the UAE and targeted another tanker in the Strait of Hormuz. Despite the escalation, equities initially opened with broad gains, reflecting some resilience. However, those gains steadily faded as the session progressed. Crude ultimately settled up 2.9% at $96.05 per barrel.

The energy sector led the market, advancing 1.2%, with Halliburton and APA Corporation among the top performers as investors rotated into energy names alongside rising oil prices.

Even as the major indices pulled back from their highs, market breadth remained constructive. Eight of the eleven S&P 500 sectors closed higher, continuing the trend of broader participation seen in recent sessions.

Consumer discretionary stocks were among the leaders. Amazon stood out after reports that CEO Andy Jassy expects artificial intelligence to significantly expand Amazon Web Services, potentially doubling projections to $600 billion by 2036. Travel-related companies also rebounded, with Expedia Group and Booking Holdings posting solid gains as the group recovered from recent weakness tied to geopolitical uncertainty.

Communication services also outperformed, supported by strength in Alphabet, which helped the sector remain near the top of the leaderboard despite broader afternoon softness.

Technology stocks finished modestly higher but lagged earlier gains. NVIDIA experienced some profit-taking following its recent GTC conference, where management outlined a potential $1 trillion revenue opportunity tied to next-generation AI chips. Even so, semiconductor stocks held up relatively well, with strong gains in Western Digital and Micron Technology supporting the broader chip sector.

Software stocks also showed relative strength, contributing to a positive finish for the technology space overall.

On the downside, the health care sector led losses, pressured by a sharp decline in Eli Lilly after a downgrade from analysts. Defensive sectors such as consumer staples and utilities also drifted lower in afternoon trading.

In other corporate developments, airline stocks outperformed following a guidance upgrade from Delta Air Lines, while Uber Technologies moved higher after reports it plans to launch a robotaxi service powered by NVIDIA’s autonomous driving platform. These gains helped offset some profit-taking within industrial stocks, particularly in defense-related names.

Small- and mid-cap stocks outperformed their large-cap counterparts, with the Russell 2000 rising 0.7% and the S&P MidCap 400 gaining 0.9%.

Overall, the session reflected a market that remains resilient but increasingly cautious. While equities managed to hold gains despite rising oil prices, the pullback from early highs signals hesitation ahead of the Federal Reserve’s decision. Investors will be closely watching tomorrow’s announcement for insight into how policymakers are assessing the recent surge in energy prices and its potential impact on inflation and interest rates.

Our FTInvest 11 model portfolio advanced 1.26% to close at 971.54, marking a strong rebound after a period of consolidation and recent declines. The move lifts the portfolio further away from last week’s lows, signaling a potential stabilization following the recent corrective phase.

While still below its all-time high of 1,039.51, today’s gain reflects renewed momentum and highlights the portfolio’s ability to recover amid market volatility. FTInvest 11 remains well-positioned with its disciplined, value-driven approach as it continues to navigate evolving market conditions.