Dow Jones Stumbles Amid Fed Rate Decision Anticipation Despite Strong Retail Data

The Dow Jones Industrial Average (DJIA) retreated Tuesday as markets positioned for Wednesday's Federal Reserve meeting, where a 25-basis-point rate cut appears priced in. August retail sales surprised to the upside at 0.6% month-over-month, nearly triple expectations, while the Atlanta Fed's Q3 GDP estimate climbed to 3.4% - potentially the strongest growth since late 2023.

Beneath the headline numbers, Wells Fargo economists warn of gathering storm clouds. "Households still have spending capacity, but labor market concerns suggest deceleration ahead," noted senior economist Sam Bullard. The control group retail figure excluding volatile components beat estimates at 0.7%, demonstrating underlying consumer resilience even as inflation risks loom.

All eyes now turn to Jerome Powell's press conference. While CME's FedWatch tool shows just 3.9% odds of a 50-bps cut, traders will scrutinize the DOT plot for clues about the terminal rate trajectory. The disconnect between robust economic data and dovish policy expectations continues to shape market psychology.