As investors looked forward to the US Federal Reserve's anticipated decision to maintain key interest rates this Wednesday, Wall Street ended little changed on Monday.
With few triggers and a turbulent session, all three of the major US indexes of stocks closed with nominal gains as investors lacked confidence ahead of the Fed's two-day monetary policy conference.
The central bank has pledged to be flexible with regard to economic data, which has somewhat shown signals that core inflation is still wandering back toward the Federal Reserve's annual 2% objective and that the US economy is still in a favorable state.
In such a situation, market investors were on edge due to mounting concerns that a deadlock on Capitol Hill might lead to a probable government shutdown.
On Monday, Janet Yellen, secretary of the Treasury, stated that while she does not foresee a risk of economic downturn, she cautioned that a government shutdown would create a situation that may lead to a loss of momentum, which is something they don't need as a risk at this stage.
The key event of the week will be the Fed's policy conference, which is anticipated to result in a rate increase pause, keeping the Fed funds target interest rate steady for the second time since March 2022, when the central bank launched its initial salvo on inflation.
The FOMC (Federal Open Markets Committee) is also scheduled to publish its quarterly Summary of Economic Projections, which will contain the "dot plot," or a peek into the expectations of participating members concerning the future trend in interest rates.
The Fed's decision to retain the key rate between 5.25% and 5.00% on Wednesday has already been factored into financial markets with a 99% certainty. Beyond that, the trajectory seems less clear, with the FedWatch tool from CME predicting a 69% chance of the FOMC remaining unchanged in November.
According to Sam Stovall, the chief investment strategist at CFRA Research in New York, the market would prefer to see the dot plot lower than it did last time. The majority would say it could be beneficial if the economic summary predictions indicated an economic softening for the upcoming year as they tried to foresee when the Fed would change course.
On the other side, the chance that the softening will turn into a recession becomes a major concern.
Investors are debating whether a slowdown or a hard landing is more likely and wondering whether the situation might worsen than what forecasts are currently predicting.
The Nasdaq Composite increased 1.90 points, the S&P 500 increased 3.21 points, and the Dow Jones Industrial Average increased 6.06 points.
Out of the 11 key S&P 500 sectors, energy shares, supported by rising oil prices, saw the highest percentage gain, while consumer discretionary stocks, led by Tesla Inc., experienced the biggest percentage loss.
After Piper Sandler downgraded the shares of the garment firm from "overweight" to "neutral," VF Corp. fell 4.6%.
Following the initiation of coverage with an "underperform" rating by Bernstein just days after its outstanding debut, shares of British chipmaker Arm Holdings fell 4.5%.
After MoffettNathanson changed its recommendation from "outperform" to "market perform," Paypal Holdings fell 2.0%.
On the New York Stock Exchange, declining issues beat advancing ones by 1.22 to 1; on the Nasdaq, the ratio was 1.74 to 1.
In comparison to the Nasdaq Composite, which posted 37 fresh highs and 247 fresh lows, the S&P 500 posted 6 fresh 52-week highs and 11 fresh lows.
Compared to the 10.05 billion shares average for the entire session over the previous 20 trading days, the amount traded on US exchanges was 9.44 billion shares.