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NEW YORK: Stocks are drifting higher in early trading ahead of what Wall Street hopes will be the last hike to interest rates for a long time. The S&P 500 was 0.2% higher in the early going Wednesday after slumping the prior day.
The Dow was barely lower and the Nasdaq was up 0.2%. The spotlight is squarely on the Federal Reserve, which will announce its latest move to combat high inflation in the afternoon. The Fed is expected to raise its overnight rate again, to the highest level since 2007. More important is what clues the Fed gives about upcoming moves.
Wall Street pointed slightly higher Wednesday as markets digest more corporate earnings while waiting for a decision on interest rates by the Federal Reserve.
Futures for the Dow Jones industrials ticked up 0.1% and the S&P 500 gained 0.3% before the bell. Shares in Europe rose while markets in Japan and China were closed Wednesday for holidays.
As worries over struggling banks and a slowing economy pile up, a political stalemate has left the U.S. edging ever closer to what would be a catastrophic default on government debt.
President Joe Biden invited the top four congressional leaders to face-to-face talks at the White House next week to try to resolve the impasse over the debt.
The Federal Reserve was expected to wrap up a two-day policy meeting later in the day by raising its key rate by a quarter percentage point to 5%-5.25% as it tries to extinguish the worst inflation in four decades.
In Europe at midday, Germany’s DAX climbed 0.9%, the CAC 40 in Paris advanced 0.7% and Britain’s FTSE 100 gained 0.3%.
In Hong Kong, the Hang Seng index lost 1.4% to 19,661.11. South Korea’s Kospi shed 0.9% to 2,501.40 and the S&P/ASX 200 in Sydney declined 1.1% to 7,184.90.
India’s Sensex lost 0.3% and shares also fell in Taiwan and Southeast Asia.
On Tuesday, the S&P 500 fell 1.2% and the Dow dropped 1.1%. The Nasdaq composite gave up 1.1% to 12,080.51.
Some of the sharpest declines were smaller- and mid-sized banks, which have been under heavy scrutiny as the banking system cracks under the weight of much higher interest rates.
PacWest Bancorp dropped 27.8%, Western Alliance Bancorp fell 15.4% and Comerica sank 12.4%.
Three of the four largest U.S. bank failures in history have come since March, and investors are hunting for the next likely to topple or suffer a debilitating exodus of customers.
Regulators seized First Republic Bank at the start of this week and sold most of it to JPMorgan Chase, which had raised hopes that the turmoil could ease.
Adding to worries, a report showed U.S. employers advertised the fewest job openings in nearly two years during March. The job market has been one of the main pillars supporting a slowing economy, and a drop-off there would likely mean a recession.
High rates have already hit the housing market sharply and hurt the banking system. Many investors are preparing for a recession to hit later this year.
Adding to the gloom, Treasury Secretary Janet Yellen said late Monday that the U.S. government could default on its debt as early as June 1 — earlier than previously thought — unless a divided Congress allows it to borrow more.
Much of the financial system is built on the assumption that U.S. government debt is the safest investment available. The hope is that Congress will strike a deal before the deadline, as it has many times before, because the alternative would be so dire.
With only weeks to go before June 1, Congress could be forced to agree to an extension of just a few months, rather than a long-term deal.
“There could be a few debt ceiling deadlines prior to the 2024 elections,” UBS strategists led by Michael Cloherty wrote in a report.
In equities trading Wednesday, CVS Health fell close to 2% before the bell, even as its first-quarter results beat expectations. The health care giant chopped 2023 earnings projections after closing a pair of multi-billion dollar deals that will push it deeper into providing care.
In the bond market, the yield on the 10-year Treasury slumped to 3.41% from 3.44% late Tuesday.
In other trading Wednesday, U.S. benchmark crude oil lost $2.18 to $69.98 per barrel in electronic trading on the New York Mercantile Exchange. It tumbled $4 on Tuesday.
Brent crude, the basis for pricing international oils, shed $2.17 to $73.15 per barrel.
The dollar fell to 135.58 Japanese yen from 136.54 yen late Tuesday. The euro rose to $1.1041 from $1.1003.
The Dow was barely lower and the Nasdaq was up 0.2%. The spotlight is squarely on the Federal Reserve, which will announce its latest move to combat high inflation in the afternoon. The Fed is expected to raise its overnight rate again, to the highest level since 2007. More important is what clues the Fed gives about upcoming moves.
Wall Street pointed slightly higher Wednesday as markets digest more corporate earnings while waiting for a decision on interest rates by the Federal Reserve.
Futures for the Dow Jones industrials ticked up 0.1% and the S&P 500 gained 0.3% before the bell. Shares in Europe rose while markets in Japan and China were closed Wednesday for holidays.
As worries over struggling banks and a slowing economy pile up, a political stalemate has left the U.S. edging ever closer to what would be a catastrophic default on government debt.
President Joe Biden invited the top four congressional leaders to face-to-face talks at the White House next week to try to resolve the impasse over the debt.
The Federal Reserve was expected to wrap up a two-day policy meeting later in the day by raising its key rate by a quarter percentage point to 5%-5.25% as it tries to extinguish the worst inflation in four decades.
In Europe at midday, Germany’s DAX climbed 0.9%, the CAC 40 in Paris advanced 0.7% and Britain’s FTSE 100 gained 0.3%.
In Hong Kong, the Hang Seng index lost 1.4% to 19,661.11. South Korea’s Kospi shed 0.9% to 2,501.40 and the S&P/ASX 200 in Sydney declined 1.1% to 7,184.90.
India’s Sensex lost 0.3% and shares also fell in Taiwan and Southeast Asia.
On Tuesday, the S&P 500 fell 1.2% and the Dow dropped 1.1%. The Nasdaq composite gave up 1.1% to 12,080.51.
Some of the sharpest declines were smaller- and mid-sized banks, which have been under heavy scrutiny as the banking system cracks under the weight of much higher interest rates.
PacWest Bancorp dropped 27.8%, Western Alliance Bancorp fell 15.4% and Comerica sank 12.4%.
Three of the four largest U.S. bank failures in history have come since March, and investors are hunting for the next likely to topple or suffer a debilitating exodus of customers.
Regulators seized First Republic Bank at the start of this week and sold most of it to JPMorgan Chase, which had raised hopes that the turmoil could ease.
Adding to worries, a report showed U.S. employers advertised the fewest job openings in nearly two years during March. The job market has been one of the main pillars supporting a slowing economy, and a drop-off there would likely mean a recession.
High rates have already hit the housing market sharply and hurt the banking system. Many investors are preparing for a recession to hit later this year.
Adding to the gloom, Treasury Secretary Janet Yellen said late Monday that the U.S. government could default on its debt as early as June 1 — earlier than previously thought — unless a divided Congress allows it to borrow more.
Much of the financial system is built on the assumption that U.S. government debt is the safest investment available. The hope is that Congress will strike a deal before the deadline, as it has many times before, because the alternative would be so dire.
With only weeks to go before June 1, Congress could be forced to agree to an extension of just a few months, rather than a long-term deal.
“There could be a few debt ceiling deadlines prior to the 2024 elections,” UBS strategists led by Michael Cloherty wrote in a report.
In equities trading Wednesday, CVS Health fell close to 2% before the bell, even as its first-quarter results beat expectations. The health care giant chopped 2023 earnings projections after closing a pair of multi-billion dollar deals that will push it deeper into providing care.
In the bond market, the yield on the 10-year Treasury slumped to 3.41% from 3.44% late Tuesday.
In other trading Wednesday, U.S. benchmark crude oil lost $2.18 to $69.98 per barrel in electronic trading on the New York Mercantile Exchange. It tumbled $4 on Tuesday.
Brent crude, the basis for pricing international oils, shed $2.17 to $73.15 per barrel.
The dollar fell to 135.58 Japanese yen from 136.54 yen late Tuesday. The euro rose to $1.1041 from $1.1003.
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