Wall Street stocks edge lower ahead of Federal Reserve decision

US stocks were muted on Wednesday ahead of a key Federal Reserve meeting later in the day, with investors hoping for hints about the central bank’s thinking on interest rate rises.

Wall Street’s benchmark S&P 500 fell 0.3 per cent, while the technology-heavy Nasdaq Composite slipped 0.2 per cent. In Europe, the regional Stoxx Europe 600 lost 0.3 per cent.

The moves come ahead of the US central bank’s Federal Open Market Committee meeting later on Wednesday, with investors expecting a fourth straight 0.75 percentage point rate rise, lifting the federal funds rate to a new target range of 3.75 per cent to 4 per cent.

US stocks have rebounded over the past fortnight on hopes that the Fed might slow the pace at which it raises borrowing costs at its December meeting.

The Fed’s mandate is to ensure stable prices, as well as maximum sustainable employment — a balancing act made all the more tricky by strong jobs data released on Tuesday that suggested the US labour market remained tight.

Employers added 437,000 job vacancies in September, bringing the total number of vacancies to 10.7mn at the end of the month, according to the labour department’s Job Openings and Labor Turnover Survey.

Aneta Markowska and Thomas Simons, economists at US bank Jefferies, said the latest jobs figures undermined hopes of a dovish pivot by the Fed.

“In order to slow the pace of hikes, the Fed needs to be able to make a compelling case that slowing labor demand will take pressure off of labor costs, ultimately slowing inflation,” the pair said. “It’s difficult to make that case after [Tuesday’s] report.”

US inflation meanwhile shows little sign of abating. The consumer price index’s core measure of inflation, which strips out volatile energy and food costs, rose 6.6 per cent on an annual basis in September — its fastest pace in four decades.

In government bond markets, the yield on the 10-year US Treasury note was steady at 4.04 per cent. The yield on the equivalent UK government bond was also flat at 3.46 per cent.

Chinese equities rose on Wednesday, consolidating gains made in the previous session as unsubstantiated rumours that the country was looking to end its strict zero-Covid policy boosted investor sentiment.

Hong Kong’s Hang Seng index was up 2.4 per cent, while China’s CSI 300 added 1.2 per cent. The two indices respectively closed 5.2 per cent and 3.6 per cent higher on Tuesday. Elsewhere in Asia, Japan’s Topix added 0.1 per cent.