The Dow edged slightly higher on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting starting on Tuesday.
The Dow Jones Industrial Average was last up 45 points, or 0.13%. The 30-share index fluctuated between a 263-point loss at its lows and a high of nearly 130 points on Monday. The S&P 500 and Nasdaq Composite traded slightly higher.
Yields rose ahead of the Fed’s likely decision to raise its benchmark rate by another 75 basis points to stamp out inflation later this week, with the 10-year Treasury yield above 3.51% and reaching its highest level in 11 years.
After some brief hope over the summer that the Fed might end its aggressive tightening campaign, investors have once again sent stocks lower on fears that the central bank will go too far and tip the economy into recession.
Investors are focused on the Fed’s policy meeting scheduled for Tuesday, where the central bank is expected to raise interest rates by another 75 basis points. Investors are also awaiting guidance on corporate earnings before the next reporting season begins in October.
“It’s a very quiet session so far,” Adam Crisafulli of Vital Knowledge wrote in a note to clients. “Stocks are off their early morning lows, but sentiment remains very gloomy. The consensus book for the week seems to be predicting a brief rally around the FOMC, which most people plan to use as opportunity to take profits in preparation for further downside (many believe a return to the June lows is inevitable).
Six of the S&P 500’s 11 major sectors rose or traded flat, led by gains in consumer discretionary, industrials and materials. Financials also rose as some investors bet higher rates could benefit their bottom lines. Healthcare was the biggest laggard, with a 1.5% drop.
Stocks fell last week as investors reacted to a hotter-than-expected inflation report and a gloomy warning from FedEx about a “significantly worsening” global economy. The major averages posted their fourth weekly loss in five weeks and were near two-month lows.
Beyond 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.