Wall Street is coming off a mixed session in which the S&P 500 rose 0.3% after hitting another record high during intraday trading. The Dow lost almost 16 points, while the Nasdaq added 0.2%.
Wall Street operates with slight increases, while operators debate how big the anticipated Fed rate cut will be.
Two of Wall Street’s three indexes rose on the back of the Federal Reserve’s first interest rate cut in four years. Gains were muted because of uncertainty about how significant the central bank’s easing will be. The S&P 500 rose 0.2%, while the Dow Jones industrial average fell 0.3%. The Nasdaq composite index rose 0.1%.
The Fed is expected to issue its latest monetary policy decision at 3 p.m. ET. The central bank is expected to cut rates by at least a quarter of a percentage point, though traders are divided on the magnitude of the reduction. CME Group’s FedWatch tool shows traders assigning a 65% probability to a half-point cut and 35% to a quarter-point move.
Wall Street: in anxiety mode
It’s unusual to have so much uncertainty ahead of a Fed decision, as the central bank typically tries to communicate its next move to markets. For most of the past month, traders believed the Fed would cut by a quarter point, but the idea of a bigger cut began to gain traction in the past week.
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Federal Reserve
“You would have to go back more than 15 years to find a situation this uncertain this close to the decision. A lot of money will be made and lost today,” Jim Reid, head of global economics and thematic research at Deutsche Bank, wrote in a note on Wednesday.
The start of a rate-cutting cycle is expected to shore up a slowing economy and further boost an already strong market, with the S&P 500 at a record high after an 18% gain this year. History shows the benchmark averaged gains of about 16% in the 12 months following the Fed’s first rate cut in a cycle, according to data from Canaccord Genuity.
Source: Ambito
