Stock futures rise as traders prepare for Fed decision

US stocks rose on Wednesday as investors looked ahead to the Federal Reserve’s latest monetary policy decision.

The S&P 500 rose about 1% shortly after the opening bell, and the index looked to end a five-day losing streak. The Nasdaq rose more than 1%, and the Dow Jones added more than 200 points, or 0.9%. The major averages held onto gains even after a new report emerged on Wednesday morning US retail sales unexpectedly fell in MayThe rise in gas prices prompted consumers to retreat from spending in other areas.

Treasury yields are down, and the benchmark 10-year yield has slipped from its highest level in more than a decade to less than 3.4%. bitcoin price (BTC-USD) took another leg lower to drop to a new December 2020 low at just over $20,000 at session lows.

Stocks fell and bond yields rose this week as traders raced to price the impact of an excessive rate hike from the Federal Reserve. Central Bank now widely expected It raised the benchmark interest rate by 75 basis points for the first time since 1994.

The possibility of such a spike was off until the middle of last week, especially since then Federal Reserve Chairman Jerome Powell stated clearly in May Policy makers have not actively considered an increase of more than 50 basis points. However, in the weeks that followed, economic data indicated that the Fed’s more measured moves had so far done little to tackle inflation, leading to Highest level in 40 years in May. Other recent data showed consumer inflation The near-term outlook has crept to almost or all-time highs.

“Given the gravity of the situation with inflation as it is now, although it’s kind of a surprise to what we’ve heard from the Fed in terms of what they’ve said they’re going to do, it seems to be the right move,” Tom Simmons, a money market expert at Jefferies, told Yahoo Finance Live. on Tuesday.” “Markets will feel more confident about the Fed’s credibility in terms of its ability to curb inflation. All in all, this will lead to a better positive outcome for the economy in the long run.”

NEW YORK, NY - JUNE 14: Traders work on the floor of the New York Stock Exchange (NYSE) on June 14, 2022 in New York City.  The Dow was higher in morning trading after Monday's drop of more than 800 points, sending the market into bearish territory as fears of a possible recession loom.  (Photo by Spencer Platt/Getty Images)

Traders work on the floor of the New York Stock Exchange (NYSE) on June 14, 2022 in New York City. (Photo by Spencer Platt/Getty Images)

However, others were less supportive of a 75 basis point hike and cast doubt on whether it will ultimately be net positive for the economy. Some critics have argued that the risks of the Fed over-tightening, or raising interest rates more quickly than markets and the economy can adjust to, may end up doing more harm than good.

“Our objection to this more aggressive measure is that it is unnecessary, because the forces that drove recent inflation numbers are already fading away,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note on Wednesday. With the extension in the housing market, it will lead to lower rental growth, while airline ticket prices are likely to fall during the summer in the wake of lower jet fuel prices, and car prices will decrease as stocks rise.”

“Inflation reform will not be more effective if the Fed raises 75 basis points.” [basis points] Today or next month, instead of 25 basis points, the damage to private sector wealth could inadvertently trigger an otherwise avoidable deflation, Shepherdson added.

The Fed’s monetary policy decision is set at 2 p.m. ET, with Powell’s press conference starting at 2:30 p.m. ET.

moving

  • Boeing (BA) Stocks added to gains on Tuesday after The company said it delivered A total of 35 aircraft in May, more than double last year’s 17 aircraft. Most of it was for its profitable 737 Max aircraft. Separately, the Seattle Times, citing an FAA official, mentioned Boeing may be able to resume deliveries of the 787 Dreamliner in the coming weeks.

  • Revlon (REV) Shares rose for the second day in a row, gaining 14% just after the market opened to add to Tuesday’s nearly 60% gain. The stock posted its biggest one-day drop ever last week, dropping more than 50% in one day, after it was reported that the cosmetics company was preparing to file for Chapter 11 bankruptcy.

  • Baidu (Baidu) Stocks rose after Reuters reported The Chinese internet giant is in talks to sell its largest stake in business flow iQiyi. Reportedly, the deal could value the company at around $7 billion.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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