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All eyes are on the Federal Reserve and Jerome Powell, the chairman of the central bank.
Tom Williams/Getty Images
The stock market was higher on Wednesday ahead of the Federal Reserve interest rate decision in the afternoon. Bond yields weren’t moving much at the moment.
Dow Jones Industrial Average
futures are up 206 points, or 0.7%, while
S&P 500
futures have gained 0.9% and
Nasdaq Composite
futures are up 1.1%.
The Fed is expected to raise the benchmark interest rate by at least half a percentage point when it makes its announcement at 2 pm ET. But markets are now trading in the near certainty that the Fed will raise the rate by three-quarters of a point (the fed funds futures market is trading on a 99% chance the Fed will go that far today) as the central bank tries to tackle inflation. which has recently soared to new heights.
However, much of that result is already reflected in the stock and bond markets. The S&P 500 fell nearly 11% from June 2, the peak of a brief rally, through Tuesday’s close. The 2-year Treasury yield, which attempts to forecast the level of the benchmark lending rate a couple of years from now, rose to a multi-year high of 3.435% on Tuesday, though it fell to 3.31% on Wednesday. The 10-year yield rose to a multi-year high of 3.482% on Tuesday, but is now down to 3.369%.
“It’s gotten to the point where some investors we’ve spoken to are almost begging the Fed to raise rates by 75 basis points to confirm the Fed’s panicked inflation maelstrom,” writes John Roque, chief technical strategist. 22V. Research.
Now, market participants see a pretty decent chance of a big stock market rally after the Fed speaks. The extent of the Fed’s hawkishness, its willingness to raise rates quickly, may be fully reflected at the moment in the stock market in crisis. That means if the central bank delivers news that isn’t worse than expected, stocks could enjoy a relief rally.
“With stocks, I wouldn’t be surprised if we had one of those bear market rallies after 2 pm,” writes Petter Boockvar, chief investment officer at Bleakley Advisory Group.
However, the initial surge in stocks on Wednesday did not do much for cryptocurrencies. Bitcoin was down 5% to just over 21,000. Ether was down 8.1% to just over 1,100.
Here are four stocks in motion on Wednesday:
The pain continued at companies involved in the crypto space or with exposure to digital assets. Exchange
world coinbase
(ticker: COIN) was down 6% in premarket trading, having lost 25% of its value in the past five days. software group
microstrategy
(MSTR), which has significant Bitcoin holdings on its balance sheet, fell 9% after a 33% drop since the end of last week.
Zendesk
(ZEN) rose 2.5% premarket following a report by The Wall Street Journal that the cloud-based customer service software provider was in deal talks with activist investor Jana Partners, That could include the departure of the CEO of the company.
H & M Hennes & Mauritz
(HM-B.Sweden) fell 5% in Stockholm trading, even after the retail group that owns H&M reported higher sales in the second quarter.
Email Jack Denton at jack.denton@dowjones.com