FX.co ★ US stocks drop ahead of the Fed policy meeting

US stocks dropped from all-time highs ahead of the Fed meeting on Wednesday. Meanwhile, dollar remained stable, after the recent G7 meeting drew a success.

To be more specific, S&P 500 slipped on Monday as commodities, financial and industrial sectors put pressure on the index.

Obviously, investors are very cautious, awaiting signals from the Fed about whether or not they will cut stimulus much earlier than scheduled. The members will decide at this week's meeting if the central bank will reduce its monthly bond purchases and announce an early rate hike.

Arthur Hogan, chief strategist at National Securities, said US is currently torn between having a great economic growth and seeing a significant jump in inflation. As such, everyone should monitor its effects on both profit and the Fed.

On expectations that Fed will taper its programs, bond yields fell to the bottom, which, according to strategists at Mizuho International, "gives a green light" for risk sentiment that could last up to August.

Key events for this week are:

- NATO summit (Monday);

- EU-US summit (Tuesday);

- US data on industrial output, producer prices and retail sales (Tuesday);

- policy meeting of Federal Reserve (Wednesday);

- report on Federal budget (Thursday);

- policy meeting of Swiss National Bank and Norges Bank (Thursday);

- policy meeting of Bank of Japan (Friday)