U.S. stocks trimmed an advance as Apple Inc. fell for a second day to weigh on technology shares, while a rebound in banks lost some momentum as investors awaited key policy meetings for the Federal Reserve and Bank of Japan this week.
The S&P 500 Index climbed 0.2 percent to 2,142.90 at 12:24 p.m. in New York, after rising as much as 0.7 percent. Apple fell 1.3 percent, wiping out an early 1.1 percent gain.
“The Fed will not raise interest rates this week, but they will be pretty aggressive in saying a rate increase is coming,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. “There’s a chance for volatility to remain, simply because I don’t think the Fed is going to clear up any uncertainty about the path of interest rates and in an election where it looks like it’s going to be a very tough fight for both candidates.”
Volatility has flared as central banks signaled they are rethinking the approach to the monetary stimulus. The S&P 500 rose 0.5 percent in the five days through Friday, bouncing after its worst week since February. Still, the benchmark trades at about 18.2 times estimated earnings, the highest since 2009, and for stocks to hit forecasts for next year, they would have to increase profits by 13 percent, something that hasn’t happened since 2011.
A report on August housing starts tomorrow is the last bit of significant data to offer an indication on the strength of U.S. growth before the Fed announces its rate decision on Wednesday. A reading today showed confidence among homebuilders rose to an 11-month high in September, indicating the housing market will continue to advance.
Reports last week offered contrasting evidence of the state of the economy: the cost of living rose more in August than projected, while consumer confidence this month held at the lowest level since April. A gauge tracking the degree to which data miss or exceed economists’ estimates is near a two-month low.
The odds for a September rate increase have fallen to 20 percent from 30 percent less than two weeks ago, with December the first month with more than even odds of a hike. Economists surveyed by Bloomberg expect the Fed to keep rates unchanged, while strengthening guidance about its intentions to raise borrowing costs soon. The Bank of Japan will also undertake a review of its monetary policy this week.