The Fourth of July fireworks show will come a few days early on Wall Street - but like a damp bottle-rocket, it may soon fizzle out.
Trading in stocks, bonds and currencies following the end of the much-anticipated two-day Fed meeting on Thursday and heading into a long holiday weekend is almost certain to be highly volatile amid a flurry of news and a dearth of traders.
Not only will markets lean on every word, comma and implication in the Federal Reserve's statement accompanying what is widely expected to be a quarter-percentage-point increase in benchmark overnight interest rates, but quarter-end window dressing and rebalancing of the Russell indexes may further fluster markets.
The next two days are going to be very busy. Between the Fed, the end of the month, the end of the quarter and the Russell rebalancing, I expect a lot of activity in the trading desk, said Evan Olsen, head of equity trading at Stephens Inc. in Little Rock, Arkansas. Flows are probably going to get bigger, and so is volatility.
Financial markets have almost fully priced in another Fed rate increase in August, following what would be a 17th straight quarter-point hike on Thursday, driven by Fed officials' rhetoric and signs that inflation outside of food and energy costs is quickening.
At the same time, talk has emerged of a more aggressive half-percentage-point increase this week, although most investors dismiss such a move as incompatible with the central bank's commitment to clear and transparent communications.
Fed officials have signaled they are becoming more concerned about the possibility that inflation may be at the top range of their comfort level. Others have said current rates are adequate to keep inflation at bay.
We are a bit skittish because we have had such a mixed message out of these guys, said Greg Palmer, head of equity trading at Pacific Crest Securities in Portland, Oregon.
Beyond the Fed, money managers' late adjustments to their portfolios for presentation to clients, in what is commonly called window-dressing, will further feed volatility.
Palmer, in fact, said he had not yet seen money managers adjusting positions this quarter.
Perhaps making stock markets even less predictable is the rebalancing of the Russell Indexes - compelling investors to buy and sell shares to match changes in the gauges.
When the Russell 3000 Index is rebalanced on Friday, investors and mutual funds who use that and other Russell indexes as benchmarks will seek to buy shares at their closing price - the same one used by Russell in resetting its index.
As a result, trading at the close on the Nasdaq, in particular, can increase as much as 40 percent, said Lori Richards director of client services at Russell Indexes.
But in the end, the Fed is the central concern of markets.
With that in mind, thinning volume ahead of the July 4 Independence Day holiday in the United States on Tuesday could create volatile trading conditions, said Gary Bigg, associate economist with Bank of America in New York.
I don't think the immediate bond market reaction will be coming from fundamentals, Bigg said. Probably the immediate reaction will be for bonds to sell off because markets are leaning in the direction of an August rate hike.
Some in the currency market expect a tempered reaction because investors don't want to make big bets or put on new positions ahead of a long weekend, said John McCarthy, director of foreign exchange at ING Capital Markets in New York.
There may be enough short-term volatility as people adjust, but I think it will die relatively quickly, he said.
(Additional reporting by Vivianne Rodrigues, John Parry and Gertrude Chavez-Dreyfuss)