(New York) The New York Stock Exchange indexes started the session cautiously on Wednesday, remaining very slightly down, as the markets await a monetary decision from the American central bank (Fed).
The Dow Jones Index was down 0.09%, the tech-heavy NASDAQ was down 0.12% and the S
Reassured on Tuesday by a rebound in banking stocks, the Dow Jones index was up 0.98% at 32,560.60 points, the NASDAQ had climbed 1.58% at 11,860.11 points and the S
The Federal Reserve is on a tightrope, torn between the imperative to raise interest rates to fight stubborn inflation and the temptation to put the brakes on these hikes in order to avoid further banking upheavals.
“All eyes in the financial and economic world will be on the Federal Reserve today as Chairman Jerome Powell tries to balance his fight against inflation and the sudden banking crisis,” said Art Hogan of B Riley Wealth Management.
The analyst noted that the latest data on inflation – which still amounted to 6% in February according to the CPI index – “ advocate for a continued tightening ” of credit conditions. At the same time, the preservation of financial stability suggests “a pause might be prudent”.
Still, markets are more than 85% expecting the Fed’s Currency Committee to adopt a 25 basis point hike, according to calculations by CME based on futures products. This would lead them to between 4.75% and 5%.
In the bond market, yields on ten-year Treasury bills stood at 3.61% as on the previous day.
“The market is not worried about this rate hike, as it also believes it will be one of the last Fed hikes before the possibility of at least two cuts in the second half,” said Patrick O’Hare of Briefing.com.
According to him, the most decisive for the market will be the Fed chief’s press conference at 2:30 p.m.
“Reporters will want to know why the Fed missed the implosion of SVB Financial and to what extent the central bank thinks the banking turmoil may be a problem for the economy,” O’Hare explained.
Investors will also pay attention to the Fed’s economic forecasts and the rate change projections that each member of the committee will deliver (the “dot-plots”).
The Fed meeting will be followed by that of the Bank of England on Thursday as inflation rose again in February to 10.4% when economists were betting on a decline.
On the equity front, the securities of American regional banks which had rebounded strongly the day before experienced mixed fortunes. Thus First Republic dropped 2.79% and PacWest Bancorp yielded 3.77% while Western Alliance Bancorporation gained 7.47%.
The highly volatile GameStop smallholder stock and mascot was the star of the day, inflating 35% to $23.80.
The video game distributor posted its first profit in two years in the fourth quarter, but more because of cuts in its operating costs than thanks to the health of its declining sales.
The company specializing in space launches for small Virgin Orbit satellites, in difficulty a few months after the failure of a major operation, soared 50% to 66 cents.
The company, whose operations had been put on “pause” by British billionaire Richard Branson last week “in order to preserve its capital”, plans to resume activity on Thursday.
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