Wall Street's main indexes finished a choppy session higher, as investors wait to see how aggressively the Federal Reserve will hike interest rates at this week's policy meeting
rebounded from logging their worst weekly percentage drop since June on Friday, as markets fully priced in at least a 75 basis point rise in rates at the end of Fed's Sept. 20-21 policy meeting, with Fed funds futures showing a 15% chance of a whopping 100 bps increase.Unexpectedly hot August inflation data last week also raised bets on increased rate hikes down the road, with the terminal rate for U.S. fed funds now at 4.46%.
"This is all about what's going to happen on Wednesday, and what comes out of the Fed's hands on Wednesday, so I think people are just going to wait and see until then," said Josh Markman, partner at Bel Air Investment Advisors. "We had a poor print when the CPI came in, so the Fed - who is behind the 8-ball - is now trying to get ahead of the curve and curb inflation, and that is driving equity markets."
Reflecting the caution for new bets ahead of the Fed meeting, just 9.58 million shares traded on U.S. exchanges on Monday, the sixth lightest day for trading volume this year. Focus will also be on new economic projections, due to be published alongside the Fed's policy statement at 2 p.m. ET on Wednesday.A trader stands beneath a screen on the trading floor displaying the Dow Jones Industrial Average at the New York Stock Exchange in Manhattan, New York City, U.S., September 13, 2022. REUTERS/Andrew KellyWorries of Fed tightening have dragged the S&P 500 down 18.
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