Stock Market Slips as Traders Move Cautiously Ahead of Fed Meeting

Stock markets slipped on Wednesday morning, as cautious investors parsed mixed earnings reports and prepared for the Federal Reserve to resume raising interest rates.

The S&P 500 fell 0.2 percent ahead of the Fed’s announcement. The index has gained nearly 20 percent since the start of the year, but the rally has slowed this month from its earlier breakneck pace.

The Dow Jones industrial average, a collection of 30 stocks that are intended to track the broader economy, was on course for a 13th consecutive day of gains, posting a small gain in early trading Wednesday.

Stock markets often exhibit caution ahead of major events like Fed meetings, waiting until there is clarity over the central bank’s next move.

Mixed earnings from some of the big technology companies that dominate stock indexes also weighed on the market Wednesday, with Microsoft, which is one of two companies in the S&P 500 valued at over $2 trillion, dropping more than 3 percent.

The technology-heavy Nasdaq Composite index fell 0.3 percent.

Despite the Fed seeking to engineer a gentle economic slowdown, easing inflation by raising interest rates, the economy has proved resilient. Unemployment remains low, corporate profitability has been dented but not destroyed and household budgets are in better shape than expected.

Although inflation has slowed, investors and analysts expect Fed officials to emphasize that their job is not yet over, meaning rates could rise further, or at least remain high for a prolonged period, squeezing companies and consumers.

Investors have in recent days ramped up bets on the Fed raising interest rates by an additional quarter of a percentage point later this year, and will be listening to comments from the Fed chair, Jerome H. Powell, for signs of this in his thinking.

“The U.S. Federal Reserve is not yet declaring a cease-fire with its battle on inflation,” Henk Potts, a market strategist at Barclays Private Bank, noted on Wednesday morning.