US equity indices closed lower yesterday, with the S&P 500 down 0.13% and the Nasdaq 100 slipping 0.07%. The Dow Jones Industrial Average fell 0.27%.

Futures on major indices are fluctuating between minor gains and losses ahead of the Federal Reserve's policy decision, as investors speculate that the central bank may lower rates for the first time this year.

Ahead of the Fed meeting, many traders are taking a cautious stance, waiting for clearer signals on the central bank's next steps. The market appears to be holding its breath, bracing for a potential catalyst that could trigger a sharp move up or a significant downturn in the major indices. In addition, geopolitical factors are increasingly shaping the outlook for financial markets. Any signs of instability, whether from escalating conflicts or new trade restrictions, could push investors into safer assets, which would inevitably impact stocks and other risk-sensitive instruments.

The MSCI Asia Pacific Index erased early losses to finish unchanged. Chinese indices jumped to a four-year high, buoyed by optimism over artificial intelligence demand. Baidu Inc. shares surged 18% after an analyst rating upgrade. US equity futures were little changed, while European contracts moved higher.

The dollar held steady after two days of declines that brought it close to levels last seen in March 2022. Gold remains near record highs after climbing above $3,700 an ounce for the first time.

As mentioned above, investor focus is firmly on the Fed, where they will be searching for clues about the rate outlook that could shape the path forward. Some bond traders have increased their bets that the central bank will cut rates by at least half a percentage point over the three remaining monetary policy meetings this year.

Japanese government bonds advanced after a 20-year debt sale saw the strongest demand since 2020, as investors were drawn in by higher yields despite ongoing political uncertainty.

Meanwhile, money markets have fully priced a 25-basis-point Fed rate cut, along with additional easing in the coming year. If the Fed fails to deliver clear signals about further rate cuts, it would be a discouraging sign for equity bulls who are counting on a gradual shift toward looser policy.

In commodities, oil prices stabilized after three days of gains as traders assessed the implications of Ukrainian attacks on Russian oil infrastructure.

From a technical perspective, the immediate task for S&P 500 buyers today is to overcome nearby resistance at $6,616. That would set the stage for a push to $6,627. Securing a hold above $6,638 remains a key objective for the bulls. On the downside, buyers will need to defend the $6,603 area in the event of weaker risk appetite. A move below this level would quickly drag the index back to $6,590 and potentially open the way to $6,577.