Stocks Stall as Traders Mark Time Before Rate Call: Markets Wrap

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(Bloomberg) — Stocks treaded water as markets saw muted moves across most asset classes, with traders taking bets off the table ahead of Wednesday’s Federal Reserve interest-rate decision.

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With equities near record highs, the quiet tone belies uncertainty over how the Fed will signal the path for rates, with a quarter-point cut at this meeting and three more by April already priced in. The risk is that policymakers — tasked with protecting the job market — sound less dovish to keep inflation in check.

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Also looming over the meeting is the standoff over Fed policy, with President Donald Trump’s hard-charging push for lower borrowing costs clashing with Fed Chair Jerome Powell’s hitherto cautious stance on tariff-driven price pressures.

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“There’s the potential for big divergence between officials,” wrote Deutsche Bank AG strategist Jim Reid. “There’s also the possibility of multiple dissents. The last meeting saw two governors dissent for the first time since 1993, whilst Trump-appointee Stephen Miran has also joined the board now.”

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S&P 500 and Nasdaq 100 futures were little changed. Nvidia Corp. fell 1.2% in premarket trading after a Financial Times report that a Chinese watchdog ordered the country’s biggest tech firms to terminate orders for the RTX Pro 6000D product.

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European stocks nudged 0.2% higher to recoup some of the previous session’s losses. MSCI’s gauge for Asian equities hovered at an all-time high. Bloomberg’s gauge of the dollar held near the lowest since 2022. 

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Global bond markets posted modest gains, with the yield on 10-year Treasuries falling two basis points to 4.01%. Gold retreated from a record after briefly breaking through $3,700 an ounce in the previous session.

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Alongside the expected 25 basis-point cut, investors will also pore over the Fed’s latest quarterly rate projections, known as the dot plot. Back in June, the Fed penciled in three cuts through the end of 2026, compared to nearly six priced in now by traders.

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“The Fed is likely to balance this against still-elevated services inflation, maintaining a degree of flexibility in its messaging,” wrote Gabriele Foà, Portfolio Manager at Algebris Investments. “Today’s meeting is set to mark the official start of the easing cycle, with the Fed signalling that future moves will remain data dependent.”

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