To The Moon

Stocks Tick Up in Quiet Session Ahead of Fed Decision

U.S. stocks inched higher Monday, with technology shares stabilizing after slumping at the end of last week.

Overall, it was a subdued trading session in the lead-up to the Federal Reserve's interest-rate decision on Wednesday. The $S&P 500(.SPX)$ , the $DJIA(.DJI)$  and the $NASDAQ(.IXIC)$  all rose less than 0.1%.

In the absence of major catalysts, traders took the opportunity to scoop up some stocks that fell last week.

$Adobe(ADBE.US)$, which kicked off the tech selloff on Friday after it reported earnings that failed to impress investors, stopped its slide by gaining 0.7%.

Likewise, $NVIDIA Corp(NVDA)$ ticked up 0.2% and $Apple(AAPL)$ climbed 1.7%, making it one of the S&P 500's biggest gainers. The vaccine maker Moderna led laggards, shedding 9.1%, after $Pfizer(PFE)$  's finance chief predicted weaker demand for Covid shots this year.

Elsewhere in markets, the yield on the benchmark 10-year U.S. Treasury note settled at 4.318%, down from 4.321% Friday.

Earlier in the session, the 10-year yield had climbed above its 2023 high of 4.339% -- its highest close since 2007. However, the yield slipped around midday, echoing a move in oil prices, which also retraced early gains.

Treasury yields sitting at the top of their recent range are one factor keeping a cap on stocks, according to many investors and analysts.

Major indexes advanced from late March to late July. But they have since flatlined, with investors pondering whether an improving economic outlook is enough to justify even higher prices when they can now get attractive returns from ultrasafe assets such as U.S. Treasury bills.

For their part, Treasury yields have climbed based largely on bets that the Fed will keep interest rates higher for longer in the absence of any pressing need to start slashing borrowing costs.

The central bank on Wednesday is widely expected to keep the benchmark federal-funds rate unchanged at a target range of 5.25% to 5.5%. Officials will also release projections showing where they think rates will go over the next few years.

As it stands, interest-rate derivatives suggest that investors believe that the Fed likely won't raise rates again this year, even though most officials had forecast in June that rates would end the year above 5.5%.

Many investors expect the central bank will continue to signal on Wednesday that it remains open, but not committed, to raising rates this year, depending on the economic data.

Some said, though, that they are even more interested to learn how officials are thinking about next year.

For his part, Abella said he thinks investors might still be overestimating how soon the Fed will cut rates.

Even if inflation continues to fall toward the Fed's 2% target, he said, it will be hard for the central bank to cut rates "if the economy is still revved up and markets are still trading at relatively high valuations."

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