US stocks edge higher as investors brace for the final Fed decision of the year

Markets are expecting the Fed to hold interest rates steady at the conclusion of its meeting, potentially setting the stage for cuts in early 2024.

• Stocks moved higher on Wednesday as traders braced for the Fed's next interest rate decision. 
• Markets are expecting the Fed to hold interest rates at the current range of 5.25%-5.50%. 
• It's still possible the Fed signals a more hawkish stance, given inflation is firmly above its target. 

US stocks were mostly higher on Wednesday as investors looked ahead to the Fed's next interest rate move.

The major indexes ticked higher as the market opened and bond yields eased, with the 10-year US Treasury slipping three basis points to 4.17%.

Central bankers are will announce their final policy decision of the year today at 2 p.m., with Fed Chairman Jerome Powell set to speak shortly after. Markets are pricing in a near-100% chance Fed officials will choose to keep rates unchanged in December, and are hoping to hear some talk of potential easing of monetary policy to start early next year. 

The Fed, though, has said rates can stay higher for longer as inflation remains above its 2% target and the economy continues to show resilience. Prices cooled slightly to 3.1% in November, still well-above the Fed's long-run inflation target of 2%. 

"We believe the markets are priced for near-term disappointment," Comerica Wealth Management CIO John Lynch said in a statement on Wednesday. "Recent data on inflation, employment, and Jerome Powell's persistent messaging are inconsistent with the market's optimism."

The Fed will likely project rates remaining around 5.1% by the end of 2024, the wealth manager said. More than half of investors are pricing in at least 100 basis-points of rate cuts by the end of 2024, according to the CME FedWatch tool.

Here's where US indexes stood shorty after at the 9:30 a.m. opening bell on Wednesday: 

• S&P 500: 4,646.24, up 0.04% 
• Dow Jones Industrial Average: 36,558.35, down 0.05% (-19.59 points)
• Nasdaq Composite: 14,576.54, up 0.31% 

Here's what else is going on today: 

• Wall Street's fear gauge is crashing toward a 4-year low. That could be a sign of overconfidence, UBS says.
• Elite investor Jeremy Grantham has warned stocks are in a bubble and could plunge by over 50% - but his colleague says they've gotten cheaper
• Inflation is 'permanent' and you'll never regain your lost purchasing power, says a Wall Street guru.

In commodities, bonds, and crypto: 

• West Texas Intermediate crude oil ticked higher 0.25% to $68.78 a barrel. Brent crude, the international benchmark, edged up 0.23% to $73.39 a barrel. 
• Gold inched 0.25% up to $1,998 per ounce. 
• The 10-year Treasury yield fell three basis points to 4.17%.
• Bitcoin slipped 0.91% to $41,357.