On Tuesday, stocks rose as investors turned their attention towards the Federal Reserves anticipated interest rate hike on Wednesday (December 14th) and potential changes in its inflation and growth stance. According to Reuters, the S&P 500 and Dow Jones industrial average hit fresh record highs in early U.S. trading, and the Dow was less than 1 percent away from hitting the 20,000 mark for the first time. The gains extended the market's post U.S.-election move up that has been driven largely by hopes of better U.S. economic growth under President-elect Donald Trump.
Yet uncertainty over whether the Fed would signal a slow or fast pace of rate increases following its meeting kept the dollar steady against a basket of currencies. The Fed on Wednesday is widely expected to hike interest rates for the first time since last December and only the second since the 2007-2009 financial crisis, but investors will be examining the central bank's statement and economic forecasts for any signs of how it thinks Trump's election affects the outlook for growth and inflation.
"Understandably, the market is in a little bit of a holding pattern" ahead of the Fed's policy statement, said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.
U.S. Treasury yields slipped, consolidating recent gains ahead of the Fed announcement.