American flags fly outside the New York Stock Exchange in New York. (AP Photo/Mary Altaffer, File)

NEW YORK (AP) — Stocks are ticking higher on Wall Street this morning ahead of what many investors hope will be one of the Federal Reserve’s last economy-shaking hikes to interest rates for a while.

The S&P 500 was 0.3 percent higher as of 9:36 a.m. Eastern and on pace to close out its third winning month in the last four. The Dow Jones Industrial Average was up 44 points, or 0.1 percent, at 33,761 and the Nasdaq composite was 0.5 percent higher.

Markets got a boost after a report showed that growth for U.S. workers’ pay and benefits slowed during the end of 2022. While that’s frustrating for people trying to keep up with soaring prices for eggs and other groceries, markets see it as an encouraging sign of easing pressure on inflation.

With the pace of inflation cooling since the summer, virtually all of Wall Street expects the Federal Reserve on Wednesday to announce its smallest increase to interest rates since March, at 0.25 percentage points. That would be the latest stepdown after it pushed through four straight increases of 0.75 points and then a hike of 0.50 points.

Such moves try to stamp out inflation by intentionally slowing the economy and dragging down on prices for stocks and other investments. The worry is that too-high rates would cause a severe recession and drop-off in corporate profits.

Such worries, combined with hopes for an easier Fed, have led to sharp swings in markets recently. They’ve hit not only day-to-day but also hour-to-hour. Analysts say much of this past month’s gains has been more about improving sentiment among investors than any big improvement in the economy or profits.

Treasury yields fell immediately after the release of the report on employment costs. The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, dipped to 3.50 percent from 3.54 percent late Monday. The two-year yield, which moves more on expectations for the Fed, slipped to 4.22 percent from 4.24 percent.

With seemingly everyone on the same page about what the Fed will do on Wednesday, the big question is what comes afterwards. The Fed has so far pledged to keep rates higher for longer to ensure inflation is truly defeated. Markets, meanwhile, are holding out hope that just one more small increase is on the way and that cuts to rates could follow late in the year.

Earnings reporting season is also approaching top gear, with McDonald’s, Exxon Mobil and other big companies headlining the day. They offered a mixed picture, much as reports have so far this reporting season.

McDonald’s fell 1.3 percent despite reporting stronger profit and revenue than analysts expected. What may have disappointed Wall Street was McDonald’s forecast for upcoming profit margins. They could imply inflation and cost pressures may be continuing to squeeze the company.

Caterpillar dropped 4.2 percent after it reported weaker profit than expected but stronger revenue.

On the winning side was General Motors, which revved up by 7.2 percent after reporting stronger profit and revenue than expected.

Stock markets overseas were mostly lower.

In a positive sign, the IMF said the global economy’s outlook has grown slightly brighter as China eases its zero-COVID policies and economies show surprising resilience in the face of high inflation, elevated interest rates and Russia’s ongoing war against Ukraine.

Meanwhile, a survey released today showed Chinese factory activity rebounded in January, adding to signs the world’s second-largest economy might be recovering from a painful slump.