U.S. Stocks May Lack Direction As Fed Announcement Looms

With traders looking ahead to the Federal Reserve’s monetary policy announcement, stocks may turn in a lackluster performance in early trading on Monday. The major index futures are currently pointing to a mixed open, with the S&P 500 futures up by 0.3 percent but the Nasdaq futures down by 0.2 percent.

Traders may be reluctant to make significant moves ahead of the Fed’s likely increase in interest rates on Wednesday.

The Fed is widely expected to raise interest rates by 25 basis points, with traders likely to pay close attention to the accompanying statement for clues about further rate hikes.

The central bank is likely to continue raising rates over the comings months in an effort to combat elevated inflation, although the economic impact of the Russia-Ukraine conflict may affect the pace.

The ongoing war will subsequently remain on investors’ minds, as another round of peace talks are being held today.

Some buying interest may be generated in reaction to a sharp drop by the price of crude oil, with stocks largely moving inversely to oil prices in recent sessions.

After opening on a strong note, U.S. stocks pared gains and slipped deeper into the red to eventually close on a very weak note on Friday, with technology stocks suffering sharp losses.

The major averages all ended notably lower. The Dow, which climbed to 33,515.61 in early trading, ended with a loss of 229.88 points or 0.7 percent at 32,944.19. The S&P 500 settled lower by 55.21 points or 1.3 percent at 4,204.31, well off the day’s high of 4,291.01, and the Nasdaq ended down by 286.15 points or 2.2 percent at 12,843.81.

The Dow shed about 2 percent for the week, moving lower for the fifth straight week. The Nasdaq and S&P 500 lost 3.5 percent and 2.9 percent, respectively for the week.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while China’s Shanghai Composite Index tumbled by 2.6 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.’s FTSE 100 Index has edged up by 0.2 percent, the French CAC 40 Index and the German DAX Index are jumping by 1.5 percent and 1.7 percent, respectively.

In commodities trading, crude oil futures are plunging $4.62 to $104.71 a barrel after surging $3.31 to $109.33 a barrel last Friday. Meanwhile, after falling $15.40 to $1,985 an ounce in the previous session, gold futures are sliding $17.70 to $1,967.30 an ounce.

On the currency front, the U.S. dollar is trading at 117.90 yen versus the 117.29 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0954 compared to last Friday’s $1.0912.

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