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Market Watch: Wall Street Awaits Outcome of Upcoming Fed Rate Decision"

The U.S. stock market is starting the week on a lower note, with Nasdaq futures down by over 1% at the start of the busiest earnings season. Investors are keeping a close eye on the Federal Reserve's two-day policy meeting, set to take place on Wednesday.

he market expects the Fed to hike the Fed funds rate by 25 basis points, marking the smallest rate increase since the central bank kicked off its tightening cycle 10 months ago.

Market sentiment is being influenced by the recent economic reports that indicate slowing demand and cooling inflation. Despite these trends, the Fed is expected to err on the side of caution with respect to inflation, as it remains well above the target of 2%. Money markets predict that interest rates will peak at 4.9% in June, still below the 5% level expected by Fed policymakers.

This week, investors will be paying attention to 107 S&P 500 firms as they report their quarterly earnings. This includes large tech companies such as Apple, Amazon, Alphabet, and Meta Platforms, all of which saw a decline of 1% or more in pre-market trading. The market will also be looking forward to the release of the Labor Department's January nonfarm payrolls data, expected on Friday. Despite the challenges, Wall Street is expected to end the month on a positive note, with the Nasdaq and the S&P 500 index recouping their December losses.

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