Wall Street flat ahead of looming FOMC decision

Wall Street closed with little change on Monday as investors await the US Fed’s decision to leave key interest rates unchanged on Wednesday, as expected. The three major US stock indexes ended a choppy session with nominal gains, as investors showed little conviction heading into the Fed’s two-day monetary policy meeting.

The US central bank has vowed to remain agile with respect to economic data, which has shown signs that core inflation remains on its meandering descent back toward the Fed’s annual 2% target, and suggests the U.S. economy remains on firm footing. Growing jitters that a stalemate on Capitol Hill could result in a potential government shutdown had market participants on edge.

Treasury Sec. Janet Yellen on Monday said that while she sees no risk of an economic downtown, she warned that a government shutdown would be “Creating… a situation that could cause a loss of momentum is something we don’t need as a risk at this point.” The week’s main event is the Fed’s policy meeting, which is expected to culminate in a rate hike pause, leaving the Fed funds target rate unchanged for the second time since March 2022.

The FOMC is also due to release its quarterly Summary of Economic Projections, which will include the “dot plot,” or a glimpse into participating members’ expectations regarding the future path of interest rates. Financial markets have currently baked in a 99% certainty that the Fed will hold the key rate at 5.25%-5.00% on Wednesday.

Beyond that, the rate hike path is less certain, with a 69% likelihood of the FOMC holding firm in November. The Dow Jones Industrial Average (DJI) rose 6.06 points, the S&P 500 (SPX) gained 3.21 points, and the Nasdaq Composite added 1.90 points. Energy shares (.SPNY), buoyed by rising crude prices, gained the most of the 11 major sectors of the S&P 500.