The wide expectation is that it will raise its key short-term interest rate by a quarter of a percentage point on Wednesday. It would be the first increase since 2018, and it would pull the federal funds rate off its record low of nearly zero.

“Finally, the Fed gets moving,” economists at BofA Global Research wrote in a report. Besides raising short-term rates, the Fed may also give more details about how it will put into reverse the massive bond-buying program it ran during the pandemic to keep long-term rates low, the economists wrote. The central bank bought trillions of dollars of bonds to shower the economy with cash.

Uncertainty about the next developments in the conflict in Ukraine and what the Fed will do this week has opened the market to daily swings as investors try to position themselves for whatever comes next. Last week, the S&P 500 marked its fourth losing week out of the last five.

On Monday, the benchmark index fell 31.20 points to 4,173.11, while the Dow inched up 1.05 points after wobbling between small gains and losses earlier, leaving it essentially unchanged at 32,945.24. The Nasdaq fell 262.59 points to 12,581.22.

Small company stocks also fell. The Russell 2000 index slid 37.95 points, or 1.9 per cent, to 1,941.72.

The Fed’s moves this week are likely to be the first in a long march to raise interest rates and slow the economy enough to stamp out the highest inflation to hit the United States in 40 years.

The yield on the 10-year Treasury jumped to 2.14 per cent from 2.00 per cent late Friday after earlier touching its highest level since July 2019. The two-year yield, which moves more on expectations for Fed policy changes, rose to 1.86 per cent from 1.75 per cent.

The Fed faces twin dangers, though. If it raises rates too quickly or too high, it would cause a recession. If it’s too passive, high inflation could become more permanent.

The war in Ukraine makes the balancing act even more difficult. It’s pushing inflation higher by raising prices for everything from nickel to natural gas. And it’s threatening to pull down on economic growth. That’s why the S&P 500 is coming off its fourth weekly loss in the last five, while crude oil prices are up by roughly a third for 2022 so far.

Oil prices gave back a lot of those gains on Monday, though, as coronavirus worries came back to the fore. A barrel of U.S. oil slid 5.8 per cent to settle at $US103.01. Brent crude, the international standard, fell 5.1 per cent to settle at $US106.90.

Spreading virus outbreaks in China could hit demand for energy and compound worries over supply chain disruptions both from the pandemic and from the war.

“Crude oil is going to move in this pretty wide range until we get more clarity on Ukraine,” Hatfield said.

A vital manufacturing and technology hub of 17.5 million people, Shenzhen is home to some of China’s most prominent companies, including telecom equipment maker Huawei Technologies Ltd., electric car brand BYD Auto, Ping An Insurance Co. and Tencent Holding, operator of the popular WeChat message service.

Foxconn, supplier to Apple and other electronics brands, said it had suspended factory lines in Shenzhen due to the shutdown. In a notice to Taiwan’s stock exchange, its listed company Hon Hai Precision Industry, the world’s largest contract manufacturing company, said it did not expect the suspension to have a major impact on its business.

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The Hang Seng index in Hong Kong fell 5 per cent, with the exchange’s tech index dropped 11 per cent. Stocks in Shanghai lost 2.6 per cent.

Roughly 55 per cent of stocks in the S&P 500 fell, with technology companies weighing down the benchmark index the most. Apple fell 2.7 per cent and chipmaker Nvidia slid 3.5 per cent.

Nielsen soared 30.5 per cent for the biggest gain in the S&P 500 following a published report saying a group of private equity firms are in advanced talks to buy the TV-ratings company.

AP