U.S. equity markets reversed course Tuesday after a string of lackluster corporate results knocked the S&P 500 and Nasdaq off consecutive record highs. Investors are now risking a high-wire act, balancing trade optimism with concerns over earnings and Federal Reserve policy.

After six straight sessions of record closes, the S&P 500 lost 0.30%, the Nasdaq fell 0.38%, and the Dow dropped 0.46%. Investors weighed mixed earnings from UnitedHealth, Boeing, Whirlpool, UPS, and Merck, whose forecasts and guidance disappointed. UPS slumped 10.6% after declining to issue revenue or margin outlooks. UnitedHealth shares fell 7.5% after cutting its profit forecast. Whirlpool sank 13.4% on weak Q2 results and a revised dividend outlook.

Meanwhile, Treasury yields fell sharply, with the 30-year rate sliding 10 basis points, reflecting heightened caution ahead of the Federal Reserve meeting set for Wednesday. The dollar gained 0.3%, headwinds for commodities and exporters. The curve between 2-year and 10-year Treasury yields flattened for the eighth time in nine days. Investors are awaiting Fed Chair Jerome Powell’s press conference for any clues on rate movement.

Amid this, optimism around easing trade friction gave markets a temporary boost earlier in the week. The IMF raised its global growth forecast for 2025 to 3.0%, citing cooling U.S. tariffs and easing trade tensions. Yet the institution flagged ongoing risks from high tariffs, geopolitical uncertainty, and policy inconsistency. U.S. growth received a modest lift to 1.9%, but officials cautioned that tariff-driven spending spikes may fade.

In the background, regulators are pushing forward on cryptocurrency clarity. Reuters reports that a Trump administration working group will publish its first major policy blueprint this week, detailing U.S. positions on tokenization, stablecoins, and digital asset oversight. Analysts expect the plan to influence upcoming legislation, including market-structure bills already under Senate review.

Crypto markets remain upbeat, even amid the equity pullback. Ether has gained over 50% in the past 90 days and continues to attract strong ETF flows. The EU has raised concerns that dollar-backed stablecoins could undermine ECB monetary control, escalating the regulatory divide between U.S. clarity and European caution.

All eyes are now on the Fed’s statement and press conference. A dovish tone could revive equity momentum; a cautious tone may dampen sentiment. Big tech companies, Microsoft, Meta, Apple, and Amazon, report this week, and their outlooks could shape investor positioning into Q3. Wage growth, inflation data, and trade talks with China in Stockholm also pose macro catalysts. Markets have gained breathing room, but cracks in earnings and policy uncertainty suggest volatility could re-emerge quickly.

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