Wall Street stocks were mostly up on Wednesday.
In midday trading, the Dow Jones Industrial Average (^DJI) rose 0.6%, while the S&P 500 (^GSPC) gained about 0.3%, after the benchmarks closed on Tuesday. The tech-heavy Nasdaq Composite (^IXIC) was below a flat line after tech stocks lost ground last session as Instacart’s IPO rally lost some momentum.
Traders strongly believe the Fed won’t raise rates, meaning there’s a 99% chance the rate hike will pause. CME FedWatch tool. The focus is on what’s ahead: whether it will return to raising borrowing costs this year and whether rate cuts could be in the cards.
Read more: What Fed Rate Hike Pause Means for Bank Accounts, CDs, Loans and Credit Cards
In light of this, the focus will be on what the central bank’s “dot plot” indicates about the future path of rates, and what clues can be gleaned from Fed Chairman Jerome Powell’s comments.
A recent surge in oil prices, seen as a threat to the Fed’s efforts to curb inflation, retreated slightly on Wednesday as investors weighed how the policy decision would affect economic growth and oil demand. Brent crude (BZ=F) and WTI crude (CL=F) futures were down 0.7%, but analysts are still concerned that prices could be above $100.
In another sign of a resurgent U.S. IPO market, Clavio ( KVYO ) is set to debut Wednesday on the heels of Arm ( ARM ) and Instacart’s ( CART ) debuts. The marketing automation company was bought at $30 a share for a $9.2 billion valuation.
Elsewhere, an unexpected slowdown in UK inflation raised the prospect of the Bank of England pausing interest rate hikes after one last hike on Thursday. The British pound fell after August inflation.
Stocks trending Wednesday afternoon
IBM (IBM) stock rose more than 2% after RBC Capital Markets initiated coverage on the stock with an effective rating and a $188 price target, citing that investors are “misguided and undervalued” that IBM may be used as a software company. Artificial intelligence.
Pinterest ( PINS ) rose more than 4% as Wall Street analysts cheered news from Pinterest’s investor day. The company said on Tuesday that it expects revenue growth in the mid to high range over the next three to five years.
Intel (INTC) stock fell more than 2% after the company’s CFO said it took longer than expected to clear its databases.
Marketing automation firm Clavio ( KVYO ) made its official debut Wednesday at an $11.3 billion valuation. As of 1:15 p.m. ET, Klaviyo shares were up more than 15 percent from their IPO price of $30.
Stocks rallied ahead of Fed meeting.
The tech-heavy Nasdaq slipped into the red in afternoon trading as investors awaited a highly anticipated policy decision and press conference from Federal Reserve Chairman Jerome Powell.
The Dow Jones Industrial Average (^DJI) rose 0.6%, while the S&P 500 (^GSPC) rose about 0.2%. Meanwhile, the Nasdaq (^IXIC) fell 0.1%.
Bank of America raises S&P 500 year-end target
Even stock market bears have plenty to point to as fears of another Fed rate hike and consumer slowdown send stocks lower as 2023 draws to a close.
But Savita Subramanian, head of US equity and quantitative strategy at Bank of America, has a simple message for investors. The legend of reggae music“Don’t worry, be happy,” Subramanian wrote in a new note to clients on Wednesday.
Bank of America raised its year-end target for the S&P 500 to 4,600 from 4,300 in the note. That now reflects about 3% of S&P 500 levels.
“Recession averted,” says the consensus economist, but a new bearish narrative around stocks has emerged, writes Subramanian. “The net message of our five target indicators is aggressive, bringing a new 2023 year-end target of 4600, up from 4300.
Bank of America’s 4,600 S&P 500 call is among the highest among Wall Street strategists tracked by Yahoo Finance. According to BofA research, this is a good sign.
“Stocks Decline Expected Growth But Respond to Surprises” Suramanyan.
In the year Based on data dating back to 1999, BofA averaged the S&P 500’s year-end target by the end of August, typically yielding a 5% return through the end of the year. On the rare occasions that strategists saw the benchmark index decline in late August, the S&P 500 rose each time and boasted better average returns than strategists had predicted for the S&P 500’s gains.
At the end of August this year, strategists’ S&P 500 targets were down 2%. So even as macro headwinds emerge, there may be another surprise spot for the upside.
The Fed is expected to hold rates
The Federal Reserve is not expected to raise interest rates when it announces its latest policy decision this afternoon. This does not mean that the central bank is done raising interest rates.
Yahoo Finance’s Jennifer Schoenberger reports:
The Federal Reserve is widely expected to hold interest rates on hold on Wednesday afternoon, leaving the door open for further inflation-cutting measures.
Many economists and Fed watchers expect the officials to pencil in one more rate hike before heading into an extended break.
“I think the market is right to expect the Fed to skip this meeting,” State Street senior global macro strategist Marvin Loh told Yahoo Finance on Tuesday, adding that the Fed remains “an option for another hike before they complete the tightening process.”
Following 11 rate hikes since March 2022, rates are now in the 5.25%-5.5% range, the most aggressive move from the central bank to tackle inflation since the 1980s.
But while many expect just one more rate hike, the bigger question may be how long the Fed will stay at higher rates. Will officials see a 100 basis point rate cut next year, or will there be smaller rate cuts, suggesting rates will remain high for longer?
Loh added: “They may signal that they will not cut back drastically into next year.” “So this higher long-term message is probably where we’re going to start to see concerns about interest rates … being higher over the last couple of days and a little more volatile in equity markets.”
Fed Chairman Jerome Powell may already know that his job is not done on inflation and that the Fed will continue on its path to return inflation to 2%.
Powell may reiterate the message from Jackson Hole that the Fed is “in a position to proceed with caution” as it moves forward, leaving rate hikes squarely on the table.
“One thing I’d like to credit Powell and company with is that they’ve led the markets very well so far,” Wisdomtree’s head of fixed income strategy Kevin Flanagan told Yahoo Finance.
Stocks open higher ahead of the Fed meeting
Stocks were in the green Wednesday morning as investors awaited the latest policy decision from the Federal Reserve, due at 2 p.m. While the central bank is widely expected to keep interest rates on hold, investors will be focused on the Fed’s plans for future rate hikes.
The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) popped 0.2%. Meanwhile, the tech-heavy Nasdaq (^IXIC) rose above the flat line.
Instacart, Pinterest and General Mills: Stocks trending in premarket trading
Here are some of the stocks leading Yahoo Finance’s trending tickers page in premarket trading on Wednesday:
Instacart (Maplebear Inc.) (CART): The share of the grocery delivery business was down 4 percent. On Tuesday, Instacart went public on the Nasdaq. The stock opened at around $42, 40% higher than expectations of $30, but posted gains of about 12% before the close.
Pinterest: Shares of the image-sharing and social media service rose 4 percent. On Tuesday, it announced the appointment of former chief financial officer and eBay interim CEO Scott Schenkel to the board.
General Mills (GIS): Cheerios maker General Mills rose 1% after increasing quarterly sales as higher prices on its products helped offset a slowdown in demand.
Dollar General (DG) Shares were down 1 percent. A report from Bloomberg on Wednesday documented poor operating conditions at the retailer’s stores.
Stock futures rose, focusing on the Fed
Stocks on Wall Street pointed to a higher open after the Federal Reserve’s policy decision on Wednesday, with traders convinced that policymakers are keeping interest rates on hold.
Futures tied to the Dow Jones Industrial Average (^DJI) rose 0.20%, or 68 points, while S&P 500 (^GSPC) futures rose 0.17%. Nasdaq 100 futures rose 0.13%
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