U.S. Stocks Face Crucial Test as Fed Meeting Looms

U.S. stocks are closely watching the Federal Reserve's upcoming meeting for guidance on interest rate cuts. The Nasdaq has reached a new milestone, but with economic growth and inflation strong, future rate cuts remain uncertain. Analysts predict caution from the Fed.

The U.S. stock market faces a key moment as investors turn their focus to the Federal Reserve's meeting this week. The central bank's guidance on interest rate cuts could significantly influence market dynamics.

Recently, the Nasdaq Composite surpassed the 20,000 mark, showcasing a year where it has surged 32%, while the S&P 500 has climbed 27%. The expectation of Fed rate cuts has been a critical driver of these gains. However, with robust economic growth and stubborn inflation, the Federal Reserve's approach to monetary easing in 2024 remains in question.

Bond yields have experienced upward pressure, reaching a three-week high for the 10-year U.S. Treasury yield, posing potential challenges to equity markets. As the central bank's decision approaches, investors and analysts are keenly assessing the implications for stocks and the broader economic landscape.

(With inputs from agencies.)