The U.S. stock market reached fresh closing highs for the year on Tuesday, with the Dow Jones Industrial Average booking its third-highest finish in history. Investors eagerly awaited the Federal Reserve's announcement on Wednesday, hoping for further insights into the potential path of interest rates.

Dow Jones Sets Record Close

Preliminary FactSet data showed that the Dow Jones Industrial Average (DJIA) gained about 173 points, or 0.5%, ending near 36,577. This brought the equity gauge close to its record close of 36,799.65, achieved on January 4, 2022, according to Dow Jones Market Data.

S&P 500 and Nasdaq Also Rise

The S&P 500 index also continued its series of fresh closing highs for the year, recording a 0.5% gain. Additionally, the Nasdaq Composite Index rose by 0.7%.

Fed Expected to Maintain Rates and Provide Update

Federal Reserve Chairman Jerome Powell is not anticipated to change interest rates during Wednesday's announcement. Despite a significant decrease in inflation since its peak, the Fed is expected to keep its policy rate at a 22-year high reached in July. The market remains eager to hear the Fed's update on its projection for future rates over the coming months and years.

Decrease in Treasury Yield

On Tuesday, the benchmark 10-year Treasury yield fell to 4.205%, marking an approximately 80 basis point drop from its peak of around 5% in October. Investors are particularly interested in hearing more from Fed Chair Powell about the recent easing of financial conditions, which has resulted in lower, longer-term borrowing costs for the economy.

Stay tuned for more updates following the Federal Reserve's announcement on Wednesday.

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