Stocks looked set to open a touch higher, with investors pondering what the Federal Reserve will do with interest rates on Wednesday and beyond.
Futures tracking the Dow Jones Industrial Average climbed 17 points, or less than 0.1%. S&P 500 futures and contracts tied to the tech-heavy Nasdaq 100 both gained 0.1%.
The three major indexes all slipped on Monday, with the S&P 500 moving within striking distance of a record high before losing steam. Investors seem wary of making any major moves, ahead of the looming Fed policy decision, as well as earnings from software developer Oracle and chip maker Broadcom later this week that will give the market a better sense of how demand for artificial intelligence is holding up.
Traders are pricing in an 89% chance that the Fed will cut rates by a quarter-point on Wednesday, according to the CME Fedwatch tool. But Chair Jerome Powell is expected to strike a hawkish tone in his post-decision press conference, which could pave the way for the central bank to hold rates steady in January and beyond.
“All eyes now turn to Wednesday’s Fed meeting, where a cut is baked in – the real question is how steep the path of easing looks from here, with a pause the most likely next step,” Hargreaves Lansdown analyst Matt Britzman said.
The yield on the 10-year Treasury note climbed 1 basis point to 4.18% on Tuesday. The dollar was flat against a weighted basket of its peers, and gold futures slipped 0.1% to $4,214 an ounce. Bitcoin, the largest cryptocurrency by total market capitalization, slipped 1.4% to $90,561 over the past 24 hours.