Stocks finished higher at the start of a week that is expected to be marked by market gyrations, with the Federal Reserve poised to announce its biggest interest-rate hike in two decades.
After the worst month for the S&P 500 since the outbreak of the pandemic, dip buyers emerged, sending the benchmark index higher after a 1.7% drop earlier Monday. The technology-heavy Nasdaq 100 excelled, with titans like Microsoft and Tesla rallying. Treasury 10-year rates were near 3%, gaining alongside the currency. The price of oil increased as the demand for refined products grew.
Fears of an economic downturn, stubbornly rising inflation, and Fed policymakers' increasingly aggressive tightening language have weighed on risk appetite, causing financial markets to be volatile and driving equities near oversold levels.
As a worldwide bond-buying assault by central banks reverses, the transition away from easy money is set to intensify, posing a new threat to the global economy. Analysts predict that the Fed will raise rates by 50 basis points on Wednesday to combat the highest inflation in four decades and that it will begin shrinking its balance sheet at a maximum rate of $95 billion per month, a faster pace than most expected at the start of 2022.
At least a dozen more central banks are anticipated to make policy announcements this week, with numerous rate hikes expected. They might range in size from 15 basis points in Australia, a quarter-point in the United Kingdom, and entire percentage points in Brazil and Poland, according to economists.
