Stocks teeter in wobbly ahead of Fed decision

Traders work on the floor of the New York Stock Exchange during afternoon trading on September 13, 2022 in New York City.

Michael M. Santiago | Getty Images News | Getty Images

Stocks were in a choppy trading session on Monday ahead of the Federal Reserve’s two-day policy meeting later in the week.

The Dow Jones Industrial Average rose 70 points, or 0.22%, while the S&P 500 and Nasdaq Composite added about 0.2 points each.

Investors focused on the Federal Reserve’s policy meeting scheduled to begin on Tuesday, where the central bank is expected to raise interest rates by three-quarters of a point. Investors are also eyeing guidance on corporate earnings ahead of the next earnings season in October.

“It’s been a very quiet meeting so far,” Vital Knowledge’s Adam Crisafulli wrote in a note to clients. “Stocks have recovered from their earlier lows, but sentiment remains very bearish. The consensus strategy this week seems to be to expect a short-lived FOMC rally, with most planning to use it as an opportunity to profit for further declines Be prepared (many believe a return to the June lows is inevitable).”

In other news, the 10-year U.S. Treasury yield topped 3.5 percent on Monday, its highest level in 11 years, as interest rates continued to rise across the board ahead of the Federal Reserve’s likely decision this week to raise its benchmark rate by another three-quarters. Point to stifling inflation. After some brief summer hopes that the Federal Reserve could soon complete its aggressive tightening campaign, investors are again starting to sell stocks on fears the central bank will go too far and tip the economy into recession.

All 11 major S&P 500 sectors were up or flat, led by gains in consumer discretionary, industrials and materials. Financial stocks were also higher as some investors bet that higher interest rates could benefit their profits. Healthcare was the laggard, down 1.3%.

Stocks fell last week as investors reacted to a higher-than-expected inflation report and a gloomy warning from FedEx that the global economy was “significantly deteriorating.” The major indexes fell for a fourth straight week in five and hovered near two-month lows.

Aside from the Fed meeting, there are only a few economic data releases this week, including August housing starts on Tuesday and initial jobless claims on Thursday.

–CNBC’s Patti Domm contributed reporting.

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