Rate cuts generally act like steroids for stocks and other investments, but the Fed has been insisting it plans to hold rates at a high level to ensure the battle against inflation is won.
Economists at Goldman Sachs expect Fed policy makers on Wednesday to signal their median expectation is for rates to hit a range of 5% to 5.25%, up by half a percentage point from their last projection.
"Inflation Data and Fed Is Yesterday's News; Focus on Earnings Risk" was the title of a report published Monday by strategists at Morgan Stanley. The yield on the 10-year Treasury, which helps set rates for mortgages and other economy-setting loans, rose to 3.61% from 3.59% late Friday. The two-year yield, which tends to more closely track expectations for the Fed, rose to 4.39% from 4.34%.
The main reasons for Wall Street's struggles for much of this year have been high inflation and the higher interest rates engineered to combat it. On Wednesday, markets expect the Federal Reserve to announce its last rate hike of the year following a blitzkrieg that began in March. Other central banks around the world are also likely to raise their own rates by half a percentage point this week, including the European Central Bank.
In overseas stock markets, Asian indexes fell amid signs of a surge in coronavirus infections in China. The country is in the midst of easing some of its"zero-COVID" pandemic restrictions, which stifled the world's second-largest economy.
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