Douglas Rissing
Major market averages traded slightly higher on Wednesday morning as investors wait for word from the FOMC.
Early on and the Nasdaq (COMP.IND) gained 0.2%, S&P 500 (SP500) rose by 0.2%, and the Dow (DJI) picked up 0.1%.
The 10-year Treasury yield (US10Y) was flat at 3.60% and the 2-year yield (US2Y) gained 3 basis points to 4.20%.
There have “certainly been false dawns before, but yesterday saw several milestones that added to the optimistic mood,” Deutsche Bank’s Jim Reid wrote. “Among others, bank stocks experienced their best performance so far this year, the VIX index of volatility fell to its lowest level since the current turmoil began, and the S&P 500 closed above its level on March 8 before worries about SVB surfaced in markets more broadly.”
The FOMC announces its decision at 2 p.m. ET.
Fed funds futures priced in an 88% chance of the Fed boosting rates by 25 basis points, with a 12% chance of no move. But the recent banking crisis is hovering over the decision. Fed chief Jay Powell’s press conference will be closely watched, as usual.
“To be clear, we think any rate hike today is a mistake; we think the Fed has done enough to return inflation to the target, and we can’t be sure that the threats to the banking system are over,” Pantheon Macro’s Ian Shepherdson said. “Neither can we be sure of the severity of the real-world implications of last week’s events, even with no further failures, though we are sure that the banking crisis is a deflationary event. But none of this likely will stop the Fed from hiking today.”
Among active stocks, GameStop (GME) soared after swinging to a surprise quarterly profit.
