Wall Street got some encouragement to send stocks higher after a slowdown in inflation bolstered speculation the Federal Reserve will pause its tightening campaign this week.
That's not to say investors are betting the Fed is done with its interest-rate hikes just yet. While swap traders are putting the odds of a June increase at only 10%, they still see the potential for a July move.
And to some of the world's biggest money managers, the central bank will continue to sound hawkish even if it stays on hold Wednesday.
Tiffany Wilding at Pacific Investment Management Co. expects the Fed to signal the market should not interpret a potential pause as the end of hikes.
For Alexandra Wilson-Elizondo at Goldman Sachs Asset Management, the central bank will deliver a "hawkish pause" as the rate of disinflation remains incompatible with the Fed's 2% target.
Meantime, UBS Chief Investment Office bets officials will send a "clear message" that at least one more rate hike is likely at a later meeting.
"The Fed is comfortable pausing the hiking cycle in June, provided there is a strong statement of their intention to raise rates again should it be required," said James Athey, investment director at Abrdn.
The S&P 500 rose for a fourth consecutive day and was on pace for its longest winning run since early April. Oracle Corp. jumped toward a record after saying the company's cloud-computing business will continue its rapid growth.
Treasuries fell, while the dollar halted a two-day advance.
'Dot Plot'
In addition to the Fed decision on rates, investors' focus will be on the central bank's quarterly so-called dot plot in its Summary of Economic Projections.
