A choppy afternoon of trading left stock markets narrowly mixed on Monday as the Federal Reserve's September meeting drew closer.
The S&P 500 was flat, the Dow Jones Industrial Average lost 0.02%, and the Nasdaq fell 0.18%.
The looming Fed's September meeting undercut investor confidence that propelled markets higher earlier in the session. The Federal Open Market Committee is set to meet for two days on Tuesday, culminating in an announcement, forecasts and press conference from Fed Chair Janet Yellen on Wednesday afternoon.
A chorus of Fed opinions and mix of economic data in recent weeks have inspired intense speculation over how the FOMC will move this month. Weak retail, industrial and inflation data for August have recently undermined confidence in the U.S. economy and likely pushed the Fed to err on the side of caution. Hawkish rhetoric could continue as the Fed preps markets for the eventuality of another increase later this year.
"The markets are girding themselves for the possibility of a rate increase this week," said Paul Nolte, chartered financial analyst at Kingsview Asset Management. "Based strictly on the data, they should keep rates stable. The comments following the meeting will be instructive for a December increase."
The chances of a rate hike in September sit at 12%, according to CME Group fed funds futures. Most analysts are betting on a rate hike in December, which has a 45% likelihood. However, there are some making the case for a rate hike as soon as Wednesday.
"While concerns about inflation remain, communications from many FOMC members indicate a willingness to prepare markets for the next rate increase, if not move to that rate increase directly," Barlcays analysts wrote in a note. "Against this backdrop, we retain our outlook for a rate hike in September. We believe the data have met the Fed's threshold."