US Stocks Hold Steady Ahead of Expected Interest Rate Hike

US stocks are holding steady ahead of the Federal Reserve's interest rate decision, which is expected to include a hike to combat high inflation. The S&P 500 rose 0.4% and was on track for its second gain in eight days, while the Dow Jones Industrial Average dropped 26 points, or 0.1%. The Nasdaq composite increased by 0.7%, boosted by easing oil prices.

The price of Brent crude oil fell 3.1% to $105.39, and the yield on the 10-year Treasury decreased to 4.96% from 5.00% late Tuesday. This move suggests that investors are still concerned about inflation, despite some relief in oil prices. The Fed's decision will be closely watched, as it typically raises interest rates to combat high inflation by making borrowing more expensive and slowing the overall economy.

Traders expect a rate hike with near certainty, citing President Donald Trump's lobbying for lower interest rates instead of higher ones. However, there is still a slight chance that the Fed may hold off on raising rates, which could lead to market volatility if investors interpret it as a sign of less commitment to reducing inflation.

The release of inflation data and forecasts from the Fed will also be closely watched, providing insight into where interest rates are headed in upcoming years. Meanwhile, a report showing strong retail sales numbers last month may embolden the Fed's decision to raise rates.