US stocks fell on Tuesday, pulling back from a record-setting streak, as Fed Chair Jerome Powell signaled the central bank would proceed cautiously on further rate cuts and suggested equities were "fairly highly valued."

The Dow Jones Industrial Average (^DJI) fell 0.3%. The S&P 500 (^GSPC) fell about 0.6%, and the tech-heavy Nasdaq Composite (^IXIC) lost around 1%.

Stocks jumped on Monday to clinch a third straight day of record-high closes, lifted by optimism that the AI trade and further Fed policy easing will continue to fuel the rally. The Nasdaq led the gains as Nvidia stock surged (NVDA) after the chipmaker said it will invest at least $100 billion in OpenAI (OPAI.PVT).

But Powell's caution on Tuesday threw cold water on the rally on a couple different fronts. Powell suggested during a speech in Rhode Island that the central bank would move cautiously after resuming rate cuts last week, noting the challenge of balancing its dual mandate at the moment.

"Near-term risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation. Two-sided risks mean that there is no risk-free path," Powell said.

Later, in a question-and-answer session, he noted that "by many measures, for example, equity prices are fairly highly valued."

Powell's comments set the stage for the release on Friday of the Fed's preferred inflation gauge, the Personal Consumption Expenditures index. Wall Street will look for signs that already sticky inflation isn't heating up, which could dent high expectations for two more rate reductions this year. Other data released Tuesday showed that US business activity cooled this month, while a measure of prices paid for materials jumped, indicating price pressures are persisting.

On the tech side, the spotlight is on Micron Technology's (MU) quarterly earnings due after the bell. The memory chipmaker's results will be watched for updates on AI-driven demand and revenue guidance, with analysts expecting an almost 40% jump in sales.

Yahoo Finance's David Hollerith reports:

JPMorgan Chase (JPM) CEO Jamie Dimon said Tuesday the country’s largest bank will \\"be engaging with stakeholders and policymakers\\" on the Trump administration's recent executive order adding a $100,000 fee to a widely used foreign worker program, known as the H-1B visa.

“That caught everyone off guard,” Dimon said in a television interview with India’s CNBC-TV18. “We had a lot of phone calls over the weekend — what does this mean?”

\\"We'll be engaging with stakeholders and policymakers,\\" Dimon said in a separate interview with the Times of India newspaper.

Dimon, who has previously expressed support for the Trump administration’s move to secure the US southern border, said he believes in “merit-based immigration” and wants to “engage with the government on the issue.”

Read more here.

Yahoo Finance's Claire Boston recaps Fed Chair Powell's first remarks after the central bank lowered interest rates last week:

Powell’s comments repeated many of the same points he made last Wednesday after the central bank voted to cut interest rates 25 basis points and officials penciled in a median estimate of two more 25 basis point cuts by year-end.

The chairman is in a difficult spot, trying to maintain consensus within the Fed at a time when policymakers are divided about the future path of monetary policy and the White House is applying maximum pressure on the Fed to bring rates down further.

Stephen Miran, the newest Federal Reserve governor, said Monday in a speech that he believes benchmark interest rates should be around two percentage points lower than their current 4% to 4.25% range. He argued that today’s rates are too restrictive and could lead to more layoffs and worsening unemployment levels.

... St. Louis Fed president Alberto Musalem said Monday he supported cutting interest rates last week as a “precautionary move” to guard against the risk of higher unemployment, but cautioned there is limited room for further rate cuts before risking a boost in inflation.

Atlanta Fed president Raphael Bostic also told The Wall Street Journal in an interview published Monday that inflation concerns would make him hesitant to support another rate cut in October.

“I am concerned about the inflation that has been too high for a long time,” Bostic told the Journal. The Fed’s next meeting is Oct. 28-29.

Read more here.

Stocks edged lower after Fed Chair Powell hinted that the Federal Reserve may move cautiously to lower rates as the central bank looks to balance risks in the softening market with risks to inflation.

The Dow (^DJI) pared gains to hover above the flat line, while the S&P 500 (^GSPC) fell 0.2% and the tech-heavy Nasdaq (^IXIC) dropped 0.4%.

\\"Near-term risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation,\\" Powell stated. \\"Two-sided risks mean that there is no risk-free path.\\"

Read more here about Powell's speech.

Federal Reserve Chair Jerome Powell noted \\"an unusual and challenging development\\" in the labor market has increased downside risks to employment while inflation \\"remains somewhat elevated.\\"

\\"The US economy is showing resilience in the midst of substantial changes in trade and immigration policies, as well as in fiscal, regulatory and geopolitical arenas,\\" Powell said in his prepared remarks (see the livestream below or watch here). \\"These policies are still emerging, and their longer-term implications will take some time to be seen.\\"

Powell is speaking in Rhode Island at an event hosted by the Greater Providence Chamber of Commerce in his first public speech since the Fed lowered interest rates to a range of 4% to 4.25% a week ago. His prepared speech will be followed by a Q&A.

Investors will be listening closely for further clues on the path of interest rates for the rest of the year. Powell's remarks also will set the stage for the next release of the Fed's closely watched inflation metric, the Personal Consumption Expenditures index.

Oracle (ORCL) shares fell around 5% Tuesday, partly reversing an upswing on Monday, when the software giant's shares surged more than 6% as the White House confirmed that the company is part of a consortium of investors that will control TikTok's US operations.

Oracle and Venture Private Equity firm Silver Lake are set to lead the new venture. Oracle will be the group's \\"security provider,\\" obtaining a copy of TikTok's valuable content recommendation algorithm from its China-based parent company ByteDance, inspecting it, and retraining it on US user data.

The deal is seen as valuable because it allows Oracle to continue and possibly expand its partnership with TikTok. Oracle has stored TikTok's American user data in its servers since 2022.

Oracle also on Monday announced a shake-up among its top leadership, with two new co-CEOs replacing Safra Catz, who served as chief executive since 2014. Oracle chairman Larry Ellison, 81, will remain the company's chair of the board, and Catz will serve as executive vice chair.

Despite the decline Tuesday, Oracle stock is up 32% for the month, as the company's recent quarterly update led to soaring optimism on the future growth of its AI cloud business, fueled by a reported $300 billion deal with OpenAI. Separately, the Information reported last week that Oracle is in talks for a $20 billion compute deal with Meta (META).

The \\"Magnificent Seven\\" tech stocks — save for Meta (META) — fell across the board Tuesday.

Nvidia and Amazon (AMZN) led the declines, with both stocks dropping around 2%. Alphabet (GOOGL), Microsoft (MSFT), Apple (AAPL), and Tesla (TSLA) fell fractionally, while Meta climbed 0.3%.

The fall in Big Tech stocks comes after the group saw mixed performance during the previous trading session.

The tech-heavy Nasdaq Composite (^IXIC) climbed to a fresh record Monday as the Nvidia-OpenAI (NVDA) deal boosted optimism that the AI-fueled tech stock rally has more room to run, with Nvidia itself climbing to a record close and Tesla hitting its highest closing price so far this year.

Apple shares also jumped more than 4% Monday as Wedbush analyst Dan Ives set his price target on shares to a new high on Wall Street, $310, as demand appeared strong for its latest iPhone lineup.

Meanwhile, Amazon and Meta shares extended declines from the prior day, when the stocks fell nearly 2%. Alphabet and Microsoft had also fallen by less than 1% Monday.

The US manufacturing and services sectors grew less than expected in September, according to S&P Global's US Flash PMI reading.

The S&P Global US Manufacturing PMI hit 52, below the 52.2 expected by economists polled by Bloomberg and the reading of 53 last month. Meanwhile, the US Services PMI was 53.9, below the reading of 54 expected and 54.5 last month. Readings above 50 signal expansion in the sectors.

\\"PMI survey data are consistent with the economy expanding at a 2.2% annualized rate in the third quarter,\\" wrote Chris Williamson, chief business economist at S&P Global Market Intelligence.

\\"However, the monthly profile is one of growth having slowed from its recent peak back in July, and September saw companies also pull back on their hiring,\\" he wrote, adding to a larger narrative of cracks in the labor market. S&P Global's report on Tuesday noted a slower rate of job creation in the services sector, while the manufacturing sector saw job losses due to cost-cutting.

Meanwhile, the report said input price inflation in the manufacturing sector remained elevated at one of the highest rates since the pandemic, and inflation hit its highest level since May in the services sector.

\\"Although tariffs were again cited as a driver of higher input costs across both manufacturing and services, the number of companies able to hike selling prices to pass these costs on to customers has fallen, hinting at squeezed margins but boding well for inflation to moderate,\\" Williamson wrote.

Nvidia (NVDA) shares nudged 2% lower in early trading on Tuesday after climbing roughly 4% to a record close of $183.61 on Monday following the chipmaker's announcement of a $100 billion investment in OpenAI.

The partnership will allow OpenAI to deploy \\"at least 10 gigawatts\\" of compute capacity from the Nvidia''s AI systems — starting with its upcoming Vera Rubin platform in the second half of 2026 — to train and run the ChatGPT maker's next generation of artificial intelligence models. Thaequates to as many as 5 million of Nvidia's GPUs, Wall Street analysts estimated.

CEO Jensen Huang called it \\"the biggest AI infrastructure project in history.\\" Bank of America (BAC) analyst Vivek Arya said the deal could generate as much as $500 billion in revenue for the AI chipmaker.

Still, Arya noted, \\"The optics of such large investment in a customer will raise questions until NVDA clarifies the appropriate accounting treatment.\\" DA Davidson analyst Gil Luria also raised questions about OpenAI \\"making commitments well beyond its means.\\"

Read more in my story on the deal here.

US stocks held steady on Tuesday at the open.

The Dow Jones Industrial Average (^DJI) nudged up nearly 0.3%. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) both hovered near the flat line.

The largely muted start to Tuesday comes after the three major stock indexes hit record highs for a third consecutive trading session Monday as AI optimism was boosted by Nvidia's deal with OpenAI.

Shares of the online real estate company Better Home & Finance (BETR) popped more than 27% in premarket trading on Tuesday, adding to Monday's 46% rally after activist investor Eric Jackson called the company \\"the Shopify of mortgages.\\"

Yahoo Finance's Jake Conley reports:

Better Home, which opened for trading at $33.50 on Monday, traded as high as $73 in the wake of Jackson's announcement before giving up some of those gains and settling around $50 at Monday's close. Shares sat around $62 Tuesday morning.

Jackson said in the post that his hedge fund, EMJ Capital, has a long position in the stock.

\\"Better [Home] ($BETR) is the Shopify of mortgages,\\" Jackson wrote. \\"It's rebuilding a $15T industry from scratch with AI ... I believe BETR is a potential 350-bagger in 2 years.\\"

\\"They laugh at BETR now at $34 like they laughed at [Carvana] at $3.50 and OPEN at 51¢. But this is no meme,\\" he added.

Read more here.

Plug Power (PLUG) stock continued to mount significant gains on Tuesday, climbing 11% in premarket trading.

Over the past five days, shares have rallied 68%, including a 21% gain on Monday, as investors see a use case for the company's green hydrogen fuel in powering data centers and artificial intelligence. The company is also benefiting from a broader lift in clean energy stocks after the Federal Reserve cut interest rates last week.

On Monday, Plug also submitted a prospectus supplement to the SEC related to the potential resale of some or all of its 185.4 million shares of common stock. The warrants have an exercise price of $2.00 per share and expire on March 20, 2028.

Kenvue (KVUE) stock rebounded on Tuesday morning after President Trump linked the use of its pain-relieving drug Tylenol to autism but didn't offer new scientific evidence to support that claim.

Shares rose 4.8% in premarket trading after dropping over 7% on Monday.

In a press conference on Monday, Trump connected incidences of autism with women taking Tylenol while pregnant, which drew criticism from doctors and scientists who say that studies have not found a causal relationship between the two.

\\"Overall, we see limited judicial risk following today's announcement, but there could be some impact on Tylenol consumption due to negative headlines,\\" Citi analysts wrote in a note following the press conference.

Kenvue stock has been under pressure since reports surfaced that the Trump administration would release a report on Tylenol usage and autism. Tylenol makes up about 15% of Kenvue's US sales.

Read more here.

The S&P 500's (^GSPC) has made impressive returns in a year of economic tumult and historical parallels that hint at overextension, notes Yahoo Finance's Hamza Shaban in today's Morning Brief.

He reports:

That's not to say that we're on the verge of an epic sell-off. The math is more suggestive than prophetic. But it does prompt people interested in the stock market to consider what it would take to keep the party going.

\\"The S&P 500 is not just historically expensive on 2026 earnings but also based on an optimistic view of 2027 results,\\" [DataTrek co-founder Nicholas] Colas wrote in a note to clients Sunday.

For the S&P to maintain its estimated earnings multiple, the index would need to grow its earnings 13.4% next year and another 15% in 2027.

\\"Investor confidence must remain well above average over the next two years for the S&P to match its long-run rate of return,\\" he wrote.

Corporate profit margins holding up exceptionally well is one way to get there. ... But there's a delicate balancing act at play.

Read more here.

An order of 500 Boeing (BA) aircraft for China, which has been years in the making, is in the final stages of negotiations and is seen as the potential centerpiece of a US-China trade deal.

US Ambassador to China David Perdue did not offer any details on the size of the order but said, \\"This is a huge order.\\"

Shares of Boeing moved up over 2% in premarket trading on the sign that President Trump's plane diplomacy could deliver another deal.

Bloomberg News reports:

\\"It’s very important to the president. Very important for Boeing. I think it’s very important to China,” Perdue said Tuesday.

Boeing has been working toward finalizing a deal with China to sell as many as 500 aircraft, in a transaction that would end a sales drought that stretches back to US President Donald Trump’s last visit in 2017, Bloomberg News reported last month.

The landmark order, which has been years in the making, would be the centerpiece of a trade agreement between the two nations but has been contingent on an easing in tensions.

Read more here.

Economic data: Philadelphia Fed non-manufacturing index (September); S&P Global US manufacturing PMI (September preliminary reading); S&P Global US services PMI (September preliminary reading); S&P Global US composite PMI (September preliminary reading)

Earnings calendar: Micron Technology (MU), AutoZone (AZO), THOR Industries (THO)

Here are some of the biggest stories you may have missed overnight and early this morning:

It's not just 2025 optimism lifting the stock market

US, China close to 'huge' Boeing order

China buys Argentina soybeans, leaving US farmers sidelined

Kenvue stock bounces as Trump's Tylenol claims draw pushback

Nvidia's $100 billion OpenAI play raises big antitrust issues

Crypto traders bet on more volatility after $1.5 billion wipeout

Some PepsiCo investors wary of Elliott plan to spin out bottling

China floods the world with cheap exports after tariffs

An $800 billion revenue shortfall looms over AI

Here's a look at some of the top stocks trending in premarket trading:

Kenvue Inc (KVUE) stock rebounded and rose 5% in premarket trading on Tuesday after President Trump linked its popular pain medication Tylenol to autism risk during pregnancy.

Boeing (BA) stock rose 2% in premarket trading following news that the US and China were close to finalizing a deal for 500 aircrafts that some say could be the \\"centerpiece of a trade agreement.\\"

Micron Technology, Inc. (MU) stock rose 1% before the bell on Tuesday. The company will report its fourth-quarter earnings on Tuesday afternoon and Wall Street analysts are expecting continued strength and growing demand.

Gold (GC=F) hit a new record high as traders were unfazed by comments from Fed officials about forthcoming monetary policy.

Bloomberg reports:

Bullion edged up to hit $3,749.27 on ounce in Asia on Tuesday, following gains in the previous two sessions which included record highs. Investors have piled into exchange-traded funds — with holdings expanding at the fastest pace in more than three years on Friday — following a brief dip in prices last week as Fed Chair Jerome Powell curbed expectations for rapid easing, after the central bank reduced rates on Wednesday. Lower rates benefit typically benefit non-interest bearing precious metals.

“After pulling back the day after the Fed’s 25 basis-point rate cut — potentially on some perceived caution in Powell’s FOMC comments — new upward momentum has taken root with ETF inflows still the driving force,” BMO Capital Markets analysts including Helen Amos and George Heppel said in a note late Monday. “With a rate-cutting cycle firmly on the table we think risk-reward remains positive for prices into” the fourth quarter.

Powell is due to give a highly anticipated speech on the economic outlook later on Tuesday, after the quarterly rate forecasts that accompanied last week’s rate decision — known as the dot plot — showed a wide dispersion of views. Meanwhile, several Fed officials on Monday reiterated the need for taking a cautious approach to rate decisions moving forward, including St. Louis Fed President Alberto Musalem who said that he sees limited room for more reductions amid elevated price pressures.

Read more here.