Stocks fell on Monday in volatile trading ahead of the Fed decision this week

Traders work on the floor of the New York Stock Exchange during afternoon trading on September 13, 2022 in New York City.

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Stocks fell on Monday, alternating between gains and losses in a volatile trading session ahead of the Federal Reserve̵[ads1]7;s two-day policy meeting later this week.

The Dow Jones Industrial Average was last down 53 points, or 0.17%, as it alternated between gains and losses. The 30-share index fell as much as 263 points at its session low and rose nearly 130 points at its high. The S&P 500 and Nasdaq Composite were last down 0.28% and 0.37%, respectively.

Interest rates shot higher ahead of the Fed’s likely decision to raise benchmark interest rates by another three-quarters to stem inflation later this week, with the 10-year Treasury yield topping 3.51% and hitting an 11-year high.

After a brief hope over the summer that the Fed might end its aggressive tightening campaign soon, investors have started to dump stocks again on fears that the central bank will go too far and tip the economy into recession.

Investors are focused on the Fed’s policy meeting due to begin on Tuesday, where the central bank is expected to raise interest rates by another three-quarters. Investors are also looking for guidance on corporate earnings before the next reporting season starts in October.

“It’s a very quiet session so far,” Adam Crisafulli of Vital Knowledge wrote in a note to clients. “Stocks have climbed down from earlier in the morning, but sentiment remains very gloomy. The consensus manual for the week seems to be predicting a brief uptick around the FOMC, which most people plan to use as an opportunity to book profits in preparation for further downside ( a return to the June lows is believed by many to be inevitable).

Five of the 11 major S&P 500 sectors rose or traded flat, led by consumer discretionary, industrials and materials. The economy also edged higher as some investors bet higher interest rates could benefit their bottom lines. Healthcare was the laggard, falling 1.5%.

Shares fell last week as investors reacted to a warmer-than-expected inflation report and a gloomy warning from FedEx about a “significantly deteriorating” global economy. The major averages posted their fourth weekly loss in five weeks and hovered near two-month lows.

Beyond the Fed meeting, only a few economic data are on deck this week, including August housing starts on Tuesday and initial jobless claims on Thursday.

— CNBC’s Patti Domm contributed reporting.

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