Dow, S&P 500, Nasdaq waver with Wall Street awaiting expected Fed rate cut

US stocks dipped on Monday as Wall Street headed into a pivotal week dominated by the Federal Reserve's final policy meeting of 2025.

The S&P 500 and the Dow Jones Industrial Average fell 0.3%, while the tech-heavy Nasdaq Composite slipped 0.2%. The laggard start to the trading week comes on the heels of closing gains for stocks on Friday.

Markets are on the lookout for risks to almost-total confidence that the Fed will cut interest rates at its two-day policy meeting, which starts on Tuesday. After a recent surge in optimism, traders now see an 88% probability of a cut in Wednesday's decision, compared with 67% odds a month ago, per CME FedWatch.

A tame reading on September PCE consumer inflation kept that conviction alive on Friday, buoying appetite for risk and helping spur back-to-back weekly gains for the major gauges.

The consensus has emerged despite a split among policymakers, in part over whether to focus on the labor market or inflation — which some at the Fed worry could still be too high. But backing from influential officials for the third cut of this year has cemented bets, though the prospects for 2026 are seen as less certain.

Given that, this week's raft of economic data will be keenly eyed, with the labor market in the spotlight after a mixed bag of readings last week. The postponed October report on JOLTS job openings finally arrives on Tuesday to shed light on hiring activity, layoffs, and the pace at which workers are quitting.