Global stock markets waver as Fed decision nears
NEW YORK (AP) — U.S. stocks were more or less unchanged in midday trading Thursday as investors remained on the sidelines until the Federal Reserve's announcement this afternoon.
[...] after a summer of turmoil in financial markets and concerns about China's economy, there are more investors who believe the Fed will wait until December.
A Fed interest rate hike would be a surprise, as securities that bet on which way the Fed will move rates have shown roughly a 30 percent chance of an interest rate increase.
The Fed's low interest rate policy was designed to encourage lending, but it had a secondary effect of helping drive a seven-year bull market in stocks.
By keeping interest rates low, it made bonds, CDs and other interest-bearing investments less attractive, and drove investors to put money into the stock market.
Low borrowing costs also encourage companies to borrow money to buy back their own stock, which also tends to send stock prices higher.
"The equity market may think, 'What does Yellen know that we don't?'" John Briggs, head of bond market strategy for the Americas at RBS, wrote to clients in a report.