Stocks slip in volatile trading ahead of next Fed rate hike

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Shares fell on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting which begins on Tuesday.

The Dow Jones Industrial Average last traded 31 points, or 0.1% lower. The index of 30 stocks oscillated Monday between a loss of 263 points at its low and a high of nearly 130 points. The S&P 500 and Nasdaq Composite traded flat.

Yields rose ahead of the Fed’s likely decision to raise its benchmark rate another 75 basis points to stifle inflation later this week, with the 10-year Treasury yield rising above 3.51% and hitting its all-time high. high level in 11 years.

After brief hope over the summer that the Fed might end its aggressive tightening campaign, investors sold stocks again, fearing the central bank might go too far and tip the economy into a tailspin. a recession.

Investors are focused on the Fed’s monetary policy meeting due to start on Tuesday, during which the central bank is expected to raise interest rates another 75 basis points. Investors are also looking for guidance on corporate earnings ahead of the start of the next reporting season in October.

“We are in a wait-and-see approach and the markets are waiting for some sort of bullish or bearish catalyst to take us out of this trading range,” said Adam Sarhan, CEO of 50 Park Investments. “Markets are struggling to orient themselves and that’s the fundamental news.”

Seven of the 11 major S&P 500 sectors rose or traded flat, led by consumer discretionary, industrials and materials. Financials also advanced, with some investors betting that higher rates could benefit their bottom line. Health care lagged, down 1.3%.

Stocks tumbled last week as investors reacted to a hotter-than-expected inflation report and a dismal warning from FedEx about a “significantly worsened” global economy. The major averages posted their fourth weekly loss in five weeks and hovered near two-month lows.

Beyond the Fed meeting, there are only a few economic data releases on deck this week, including August Housing Starts on Tuesday and First Jobless Claims on Thursday.

—CNBC’s Patti Domm contributed reporting.

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