New York Stock Market Shows Mixed Trends in Narrow Range Ahead of This Week's FOMC

The three major indices of the U.S. New York stock market showed mixed movements near the flat line on Monday, the 18th (local time), ahead of the Federal Reserve's Federal Open Market Committee (FOMC) meeting scheduled for this week.

At around 10:35 a.m. at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average was up 13.60 points (0.04%) from the previous close, standing at 34,631. The large-cap-focused S&P 500 index rose 2.61 points (0.06%) to around 4,452. Meanwhile, the tech-heavy Nasdaq index traded down 4.97 points (0.04%) at about 13,703.

Currently, within the S&P 500, energy, communication, and technology-related stocks are rising, while real estate, healthcare, and materials sectors are declining. Semiconductor design company Arm, which surged nearly 25% on its Nasdaq debut last week, is trading down more than 5% from the previous close. Clorox, a household goods company well known for bleach products, fell over 1% after warning that a cyberattack in August would impact its quarterly earnings. DoorDash is up more than 3% following Mizuho Securities' upgrade of its investment rating to buy. Micron is also up over 1% after Deutsche Bank raised its target price. Semiconductor-related stocks, which had weakened last week due to reports of Taiwan's TSMC requesting delays in semiconductor delivery equipment, are trading near flat this morning.

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Investors are showing caution as they await this week's FOMC. Quincy Crosby, Chief Global Strategist at LPL Financial, said, "How the Fed announces a rate pause is very important for the rate outlook in November and December," adding, "Whether the tone is dovish or hawkish is the most critical issue in the financial markets."

The Fed is expected to maintain the current rate of 5.25-5.5% at the September FOMC meeting on the 19th-20th, but signal the possibility of further hikes within the year through the dot plot and Chairman Jerome Powell's press conference, delivering a hawkish message. According to the CME FedWatch tool, as of this morning, federal funds futures are pricing in over a 99% chance of a rate hold in September.

Notably, this FOMC meeting comes right after the recent rise in crude oil prices was clearly reflected in U.S. inflation indicators such as the August Consumer Price Index (CPI), drawing attention to the Fed's assessment of oil-driven inflation concerns. With inflation worries resurfacing, there is a possibility that tightening warnings could be stronger than expected. A survey released yesterday by the University of Chicago Booth School of Business and others showed that about half of economists expect two or more additional rate hikes. There are three remaining FOMC meetings this year: September, November, and December.

Oil prices are also rising slightly today amid concerns over supply shortages in the fourth quarter. West Texas Intermediate (WTI), the benchmark for U.S. crude oil prices, is trading near the high $91 per barrel range with about a 1% increase. Brent crude is up more than 0.5%, trading around $94 per barrel. Besides international oil prices, simultaneous strikes by the Big Three automakers organized by the United Auto Workers (UAW) are also cited as factors that could negatively impact the economic situation.

However, Ed Yardeni, CEO of Yardeni Research, appeared on CNBC's Squawk Box and predicted, "We could see a perfect disinflation where inflation falls without a recession across the economy."

In the New York bond market, the benchmark 10-year Treasury yield stands at around 4.33%, while the 2-year yield, sensitive to monetary policy, is at about 5.05%. The dollar index, which measures the value of the U.S. dollar against six major currencies, moved near 105.7, close to flat. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," jumped over 5% to 14.5.

European stock markets are declining. Germany's DAX index is trading down more than 1% from the previous close. The UK's FTSE index fell 0.75%, and France's CAC index dropped 1.46%.