Stocks inched up on Wednesday as Wall Street braced for the Federal Reserve’s first potential rate hike since the recent fallout in the banking sector.
The Dow Jones Industrial Average rose 41 points, or 0.1%. The S&P 500 and Nasdaq Composite gained 0.22% and 0.41%, respectively.
The Fed is slated to conclude its two-day policy meeting Wednesday, with an announcement expected for 2 p.m. ET. Most investors expect the central bank to stay committed to its tightening and raise rates by 25 basis points. As of Wednesday morning, there is about an 90% chance of a quarter-point increase by the Fed, according to CME Group’s FedWatch tool. Meanwhile, there’s a roughly 10% probability of there being no hike.
“Pretty much every major and minor regional bank, throughout every region of the country, has gone down dramatically in the last week or so. I do think there’s a lot of contractionary things coming,” said Rhys Williams, chief strategist at Spouting Rock Management.
“Therefore, I think the Fed needs to be mindful of this risk, and look for continuing ways to probably help the economy as opposed to hurt it, over the next quarter or two,” Williams continued.
The major averages posted strong gains in the previous session. The Dow added 316 points, or nearly 1%. The S&P 500 jumped 1.3%, and the Nasdaq gained 1.58%.
“In general, the economy is about to slow down, [since] even before this regional bank crisis,” Williams said.
“This just accelerates it. I think that that some of the inflation measures [and] money supply measures that we’re seeing were already suggesting that we were going to see we’re going to see a slowdown. I do think the inflation numbers will start to get noticeably better in the second half, no matter what the Fed does today,” Williams added.
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