The S&P 500 and the Nasdaq drifted just below record highs on Wednesday, with investors on edge before potential hints from the US Federal Reserve on when it would taper its massive monetary stimulus.

Interest rate-sensitive bank stocks shed about 1.9 percent, tracking a dip in the benchmark 10-year Treasury yield .

On the other hand, technology, utilities and healthcare were in a bright spot.

At 9:52 am ET, the Dow Jones Industrial Average was down 44.55 points, or 0.13 percent, at 34,254.78 and the S&P 500 was down 0.74 points, or 0.02 percent, at 4,245.85. The Nasdaq Composite was up 41.27 points, or 0.29 percent, at 14,114.12.

Elsewhere, world stock markets hovered near record highs, and oil prices hit their highest since April 2019 on recovering demand.

Stocks have surged to record highs as bullish investors monitor the economic recovery from the pandemic alongside unprecedented government and central bank stimulus. Volatility across asset classes has been pushed to levels last seen before COVID-19 roiled markets in March 2020.

But recent data shows inflation rising in the United States and elsewhere, keeping investors sidelined with a new Fed statement imminent.

Data on Wednesday showed UK inflation unexpectedly jumped above the Bank of England’s 2.0 percent target in May and hit 2.1 percent, following US data showing prices rose more than expected.

That heightens the attention on Wednesday’s readout from the Fed and subsequent press conference from Chair Jerome Powell. The Fed is not expected to discuss an exit from its bond purchases until later this summer, but officials could at least flag the pending start of talks about when and how to exit.

With markets having priced in the start of those talks about tapering but unsure whether rising inflation will encourage more aggressive action from the Fed and other central banks, some caution has crept in.

“Things have shifted since the last FOMC meeting. Back in April, the Fed noted that the pace of economic recovery and employment had strengthened,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman. “Since the April meeting, we have gotten two months of disappointing jobs data and two months of higher than expected inflation readings.”

Key will be Fed members’ projections, or dot plots, for interest rates and whether more now tip a hike in 2023. Previously only seven out of 18 had seen such a move.

On Wednesday, the MSCI world equity index, which tracks shares in 49 countries, was flat on the day and close to Tuesday’s record high.

The pan-European STOXX 600 index rose 0.24 percent.

Inflation projections

There could also be some upward movement in inflation projections for this year and next, as the last two readings on consumer prices surprised to the high side.

BofA’s latest survey of fund managers suggests most are sanguine on the outlook. Some 72 percent said inflation was transitory. Only 23 percent saw it as permanent.

Bond investors remain sanguine about the prospect of a shift in policy thinking.

Benchmark 10-year US Treasury yields held at 1.485 percent, a quarter of a percentage point below 2021 highs.

The only signs of investor nervousness were evident in currency markets where the dollar held near a one-month high. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.042 points or 0.05 percent.

In commodity markets, spot gold prices fell 0.12 percent percent to US$1,856.38 an ounce, not far from a one-month trough of US$1,843.

Oil prices continued their bullish run to hit their highest in more than two years, driven by signs of stronger demand and still tight supplies.

Brent crude climbed 14 cents, or 0.19 percent, to US$74.13 a barrel, after earlier hitting US$74.73, the highest seen since April 2019. US crude was last down 5 cents at US$72.07 per barrel.

Cryptocurrency prices were calm, with bitcoin dipping below US$40,000.