(New York) The New York Stock Exchange indexes cautiously started the session on Wednesday, remaining very slightly down, while the markets await a monetary decision from the American central bank (Fed).
The Dow Jones index yielded 0.09%, the technology-dominated NASDAQ yielded 0.12% and the S&P 500 0.05%, around 12:15 a.m. (Eastern time).
Reassured on Tuesday by a rebound in bank 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&P 500 by 1, 30% to 4002.87 points.
The Federal Reserve is on a tightrope, torn between the imperative to raise interest rates to fight stubborn inflation and the temptation to curb these increases 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 – “argue in favor of a continuous tightening” of credit conditions. At the same time, the preservation of financial stability suggests “a pause might be prudent”.
However, markets are more than 85% expecting the Fed’s Monetary 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%.
On the bond market, yields on ten-year Treasury bills stood cois 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 of the year,” 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. (Eastern time).
“Reporters will want to know why the Fed missed the SVB Financial bank implosion and how much the central bank thinks the banking turmoil may be a problem for the economy,” O’Hare said.
Investors will also pay attention to the Fed’s economic forecasts and the projections for rate changes 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 action and mascot of GameStop smallholders 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 sales, in decline.
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 were put on “pause” by British billionaire Richard Branson last week “in an effort to preserve its capital”, plans to resume activity on Thursday.
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