Overnight – Stocks mixed as all eyes on Fed meeting  

Stocks were mixed overnight as investors hunkered down before a Federal Reserve meeting this week where the central bank is likely to start a rate-cutting cycle.

Markets were also somewhat nervous following reports of a second attempted assassination attempt on Republican presidential candidate Donald Trump, although the former president was unharmed. 

The Fed is set to meet later this week and is widely expected to begin trimming interest rates, although traders are largely split over the scale of the potential cut. Traders are pricing in a 50% chance of a 50 basis point cut, and a 50% chance of a 25 bps cut, CME Fedwatch showed. Wednesday’s move is likely to set the tone for the Fed’s plans to begin easing monetary policy, as it grapples with some concerns over a cooling economy and labor market. But recent economic readings showed inflation remained sticky. The current situation as one in which economic activity that was in the too-strong (inflationary) range is settling into the moderate range.  

The main Wall Street indexes saw a strong performance last week despite sticky inflation readings, as heavyweight technology stocks were buoyed by some bargain buying and a resurgence in hype over artificial intelligence. Broader stocks also rose, with bets on interest rate cuts driving plays into economically sensitive sectors. The S&P500 surged 4% last week, while the Dow Jones Industrial Average rose 2.6%, both indexes near record highs. The Nasdaq Composite surged nearly 6%, but remained well below peaks hit earlier this year. 

All eyes now turn to the FOMC rate decision meeting next Wednesday night/Thursday morning Australian time