U.S. stocks declined on Tuesday amid caution ahead of the start of the Federal Reserve’s latest meeting and the release of important inflation data later in the week.

The major U.S. averages posted new all-time highs on Monday, with the S&P 500 and Nasdaq Composite reaching new records, while the Dow Jones Industrial Average rose 0.2%.

Federal Reserve begins June policy meeting

The Federal Reserve begins its latest two-day policy meeting on Tuesday, causing some caution in the markets.

On Wednesday, the Fed is expected to hold interest rates between 5.25% and 5.5%, the highest level in two decades. Several officials have recently indicated that more evidence is needed that the pace of inflation is cooling to its target level of 2% before beginning to lower rates.

Fed Chairman Jerome Powell’s subsequent press conference and the unveiling of the bank’s latest dot plot on Wednesday, which outlines how officials expect borrowing costs to evolve, will also be of significant interest.

The FOMC initially forecast three rate cuts when it released its latest projections, although policymakers are likely to reduce the number of cuts they are contemplating.

U.S. CPI release

Tuesday’s economic data agenda is quiet, but Wednesday will feature the release of the May reading of the U.S. consumer price index, a long-awaited gauge of inflation in the world’s largest economy.

Further signs of easing inflation could cement expectations for rate cuts, especially given signs of economic weakness. However, bad inflation data could spook investors and reignite recession fears that have been simmering for months.

Apple announces partnership with OpenAI

On the corporate front, results from Oracle (ORCL) and Rubrik (RBRK) will be released after the bell. However, Apple (AAPL) is likely to take center stage after the iPhone maker unveiled an alliance with OpenAI, allowing it to integrate the start-up’s ChatGPT chatbot into its products.

The alliance, unveiled Monday at Apple’s annual developer conference, comes as the tech giant looks to boost its artificial intelligence capabilities amidst growing buzz around the emerging technology.

Crude Oil Prices Lower Ahead of API Data

Oil prices were slightly lower on Tuesday, awaiting the Federal Reserve’s decision and new U.S. inflation figures.

On Monday, prices had touched one-week highs due to confidence in an increase in demand during the key U.S. summer travel period, although analysts said the positioning was likely too optimistic.

The American Petroleum Institute will release its estimate of weekly U.S. crude stockpiles later in the session.