US stocks traded lower on Wednesday morning as Wall Street braced for the highly anticipated policy announcement from the Federal Reserve and accompanying statements from President Jerome Powell.
The US central bank is widely expected to raise its key short-term interest rate by 0.75% for the fourth time in a row after wrapping up its two-day meeting at 2 PM ET.
The S&P 500 (^GSPC), the Dow Jones Industrial Average (^DJI), and the Nasdaq Composite (^IXIC) were down about 0.4% at the open.
Treasury yields advanced with stocks. The benchmark 10-year bond held above 4%, while the price-sensitive two-year yield was hovering around 4.5%.
Investors will join Powell’s press conference at 2:30 PM ET in the wake of the interest rate decision, which is set to come along with economic forecasts from policy makers and the latest dot chart showing each member’s outlook for the US short-term interest rate.
“The focus will be on what comes next, and we expect Chairman Powell to hint that the FOMC is likely to slow its pace to 50 basis points in December,” Goldman Sachs economists led by Jan Hatzius said in a recent note.
Any indication from the central bank regarding a possible easing in the pace of tightening will act as a tailwind for the major indices, which closed higher last month amid expectations of a policy pivot raised by some officials’ talks indicating a reduction in interest rate and global increases. Concerns that tightening could lead to financial instability. But some strategists have dismissed the notion that a turn in the Fed’s course is imminent, with inflation and wages still rising.
“So far, inflation and labor market benchmarks have not been met, so Mr. Powell cannot pre-announce any intention to switch to slower rate increases without contradicting what he said just six weeks ago,” Shepherdson said in comments via email. “Evidence that the pressure in the pipeline is fading is ample, but it has not yet reached the numbers that the Fed Chairman has clearly said on several very important occasions, which is the actual core inflation data.”
On the corporate front, shares of Advanced Micro Devices (AMD) rose 3% after the chip maker reported better-than-expected earnings results, although its fourth-quarter revenue guidance fell short of Wall Street estimates.
Shares of Match Group (MTCH) owner Tinder, Hinge and OkCupid rose 12% after financial statements showed revenue that beat analyst estimates and the company pledged to control costs to prepare for a lackluster economic outlook.
Shares of Mondelez International (MDLZ) rose 2% after Oreo-Maker raised its full-year forecast for sales and profits and indicated that shoppers continued to indulge in snacks and drinks despite the inflation crisis.
Meanwhile, shares of Airbnb (ABNB) fell 6% in early trading after the company warned of slowing growth in the last quarter of the year as consumers feel bad about expensive rentals and prefer urban and cross-border destinations.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
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