Wall Street rises with all eyes on Fed decision and forecasts
1:26 pm Wednesday, December 18th, 2024
By Lisa Pauline Mattackal and Purvi Agarwal
(Reuters) -Wall Street’s main indexes rose on Wednesday, regaining some ground lost in the previous session, as investors anticipated an interest rate cut from the Federal Reserve and awaited clues on what policymakers could do in 2025.
The Fed is widely expected to reduce interest rates by 25 basis points at its last meeting of the year. The announcement is expected at 2 p.m. ET on Wednesday.
With a rate cut expected by most investors, more focus is on the Fed’s summary of economic projections (SEP), which includes policymakers’ forecasts for the economy and the “dot plot” of their expectations for interest rates over the longer term.
Comments from Chair Jerome Powell will also be watched for clues on how the central bank will determine policy next year, as recent economic data has shown both strong growth and persistent inflation that could keep the Fed from cutting rates as much as previously forecast.
“The prevailing view is that the Fed will accompany the rate cut with hawkish comments, indicating that it’s time to take a pause in loosening monetary policy,” said David Morrison, senior market analyst at Trade Nation.
“This seems wise, given the incoming Trump administration, the recent uptick in inflation, decent U.S. economic growth and the strength of the U.S. stock market.”
At 12:00 p.m. ET, the Dow Jones Industrial Average rose 160.68 points, or 0.37%, to 43,610.58, the S&P 500 gained 12.56 points, or 0.21%, to 6,063.10 and the Nasdaq Composite gained 37.96 points, or 0.19%, to 20,147.02.
Higher interest rates are typically negative for the equity market, making less risky investments more attractive and pressuring companies’ stock prices as their growth slows.
Tesla edged up 1%, reversing early losses, after rising over 14% in the last three sessions, while AI giant Nvidia jumped 3.5% after hitting an over two-month low on Tuesday.
Birkenstock advanced 6.3% after the footwear maker beat market expectations for fourth-quarter results, while General Mills fell 2.5% as the Cheerios maker slashed its annual profit forecast.
The Dow is set to snap a nine-session losing streak, its longest since February 1978, lifted by UnitedHealth Group’s 3.2% rise.
Despite some jitters over future Fed policy, stocks are on track to end the year strong with the S&P 500 up over 27%, the Nasdaq up over 34% and the Dow up nearly 16%.
The rally has been fueled by technology companies that capitalized on the euphoria around artificial intelligence, the prospects of a lower rate environment and hope of pro-business policies from the incoming Donald Trump administration.
Crypto-focused stocks slipped as bitcoin fell more than 2%. MARA Holdings and Riot Platforms down 1.5% and 2.2%, respectively.
Advancing issues outnumbered decliners by a 1.03-to-1 ratio on the NYSE, while declining issues outnumbered advancers by a 1.02-to-1 ratio on the Nasdaq.
The S&P 500 posted five new 52-week highs and eight new lows, while the Nasdaq Composite recorded 67 new highs and 106 new lows.
(Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)
