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Update: Dow Logs Back-to-Back Record High in Mixed Session Ahead of Fed Decision

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Update: Dow Logs Back-to-Back Record High in Mixed Session Ahead of Fed Decision

(Updates with market moves at the end of the day.)

The Dow Jones Industrial Average hit a fresh record high on Tuesday despite a sell-off in the technology sector, as the Federal Reserve kicked off its two-day monetary policy meeting.

The Dow rose 0.6% to 51,999.7, notching a new closing high for a second straight day. The Nasdaq Composite fell 1.2% to 26,376.3, while the S&P 500 shed 0.6% to 7,511.4, the first decline in the past four sessions.

Among sectors, financials paced the gainers, while tech saw the biggest drop.

Among tech majors, Nvidia (NVDA) shares fell 2.4%, the biggest drop on the Dow, followed by Salesforce (CRM) and Microsoft (MSFT), respectively. On the S&P 500, Intel (INTC) was among the worst performers, down 8.5%.

Markets widely expect the Fed to leave its benchmark lending rate unchanged Wednesday, which would mark the central bank's fourth straight pause, according to the CME FedWatch tool. The meeting is Kevin Warsh's first as Fed chair, who assumed the role last month, replacing Jerome Powell.

"The (Federal Open Market Committee) is expected to remove the lingering easing bias from the statement, signaling instead an equal probability of the next policy move being a rate cut or a rate hike," Stifel said in a note.

The Fed is also scheduled to publish its latest Summary of Economic Projections, or SEP, document Wednesday. Stifel projects the Fed's "dot plot" to show most officials' expectations for a "stagnant" monetary policy for the rest of the year amid concerns over inflation.

West Texas Intermediate crude oil was down 4.8% at $76.89 a barrel in Tuesday late-afternoon trade, while Brent dropped 4.2% to $79.66.

The US and Iran recently agreed to end their war and reopen the Strait of Hormuz, which is the world's most important chokepoint for crude flows. The two sides are scheduled to sign their peace deal in Switzerland Friday, which would kick off another round of negotiations on Tehran's nuclear program as Iran seeks sanctions relief.

Analysts have flagged the possibility of implementation risks and potential disagreements.

Iran is demanding Israel withdraw from Lebanon, CNN reported.

"The path ahead is complex: watch for implementation disagreements, Gulf states' security demands, and Iran's continued leverage over the Strait of Hormuz," Deutsche Bank said in a note.

US Treasury yields were lower, with the 10-year rate down 4.6 basis points at 4.44% and the two-year yield falling 2.3 basis points to 4.06%.

In economic news, US housing starts plummeted to the lowest level since 2020 in May amid a steep drop in multi-family projects, government data showed.

"There is little indication that US home building will break to the upside anytime soon, given high mortgage rates, previous overbuilding in the South, elevated new home inventories relative to sales, and the current depressed level of builder activity in the (National Association of Home Builders) survey," BMO Capital Markets said in a note.

In company news, Space Exploration Technologies (SPCX) agreed to acquire Anysphere, which operates artificial intelligence coding agent Cursor, in a deal worth about $60 billion, just days after the Elon Musk-led rocket and satellite company went public. SpaceX shares rose 4.8%, rising for the third straight day following its Friday debut.

Olin (OLN) and Huntsman (HUN) agreed to merge in an all-stock deal to create a larger North American chemicals company with more than $12 billion in annual revenue. Huntsman shares slid 17%, while Olin fell 5.9%.

Gold was last seen up 0.1% at $4,355.10 per troy ounce, while silver was little changed at $70.16 per ounce.

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