The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to extend the lackluster performance seen over the course of the previous session.

Traders may remain reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to leave interest rates unchanged, but the accompanying statement could have a significant impact on the outlook for the central bank’s next decision in September.

With Fed officials repeatedly saying they need “greater confidence” inflation is slowing before cutting rates, recent inflation data has led to optimism about a September rate cut.

According to CME Group’s FedWatch Tool, there is currently a 91.6 percent chance the Fed will lower rates by a quarter point in September and an 8.3 percent chance of a half point rate cut.

Traders may also stick to sidelines ahead of the release of earnings news from companies like Microsoft (NASDAQ:MSFT), Advanced Micro Devices (NASDAQ:AMD) and Starbucks (NASDAQ:SBUX) after the close of today’s trading.

Meanwhile, a steep drop by shares of Procter & Gamble (NYSE:PG) may weigh on the Dow, with the consumer products giant plunging by 5.6 percent in pre-market trading.

The slump by Procter & Gamble comes after the company reported second quarter earnings that beat analyst estimates but weaker than expected revenues.

Fellow Dow component Merck (NYSE:MRK) may also come under pressure after the drug giant reported better than expected second quarter results but provided disappointing full-year earnings guidance.

On the other hand, rival drug giant Pfizer (NYSE:PFE), which was removed from the Dow back in 2020, is likely to see initial strength after reporting second quarter results that beat expectations and raising its full-year outlook.

Stocks moved to the upside early in the session on Monday but showed a lack of direction over the course of the trading day. The major averages spent the day bouncing back and forth across the unchanged line after posting strong gains last Friday.

The major averages eventually ended the session narrowly mixed. While the Dow edged down 49.41 points or 0.1 percent to 40,539.93, the Nasdaq inched up 12.32 points or 0.1 percent to 17,370.20 and the S&P 500 crept up 4.44 points or 0.1 percent to 5,463.54.

The choppy trading on Wall Street came as traders seemed reluctant to make significant moves ahead of the Federal Reserve’s monetary policy meeting this week.

Later in the week, the focus is likely to shift to the Labor Department’s closely watched monthly jobs report for July.

Earlier in the day, stocks benefitted from optimism ahead of the release of earnings news from several major technology companies.

Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) are among the companies due to report their quarterly results this week.

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves.

Airline stocks showed a significant move to the downside, however, with the NYSE Arca Airline Index tumbling by 2.4 percent.

A steep drop by the price of crude oil also weighed on energy stocks, dragging the Philadelphia Oil Service Index and the NYSE Arca Oil Index down by 1.6 percent and 1.0 percent, respectively.

Financial and computer hardware stocks also saw some weakness, while networking stocks saw notable strength, driving the NYSE Arca Networking Index up by 1.0 percent.