Wall Street in Holding Pattern Awaiting Federal Reserve’s Rate Decision

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Today on Wall Street, the stock market is showing a lack of direction as investors eagerly await news from the Federal Reserve regarding interest rates.

In early trading, the S&P 500 is down 0.1%, following its first monthly decline in six months. Conversely, the Dow Jones Industrial Average is up 0.3%, gaining 104 points as of 9:35 a.m. Eastern time, while the Nasdaq composite is down 0.2%.

CVS Health is facing a significant tumble of 18.3% after reporting weaker quarterly results than anticipated by analysts. The company cited increased costs in its Medicare Advantage business and has subsequently lowered its profit forecast for the year.

Similarly, other major companies such as Starbucks, Advanced Micro Devices, and Super Micro Computer are dragging down the market with disappointing profit reports. However, all eyes are on Washington, D.C., where the Federal Reserve is set to announce its latest decision on interest rates later today.

While no changes to the main interest rate are expected, Federal Reserve Chair Jerome Powell’s subsequent press conference could offer insight into the possibility of future rate cuts. Powell recently suggested that interest rates may remain elevated for some time, disappointing those who had anticipated multiple rate cuts in 2024.

This shift in expectations has led many traders to revise their forecasts, with some now speculating on the possibility of only one rate cut or none at all this year. This adjustment follows a series of inflation reports that have exceeded expectations, dampening hopes for significant rate reductions.

In the absence of accommodative monetary policy, companies will need to deliver robust profits to drive investor confidence. Starbucks, for example, saw a 15% decline in its stock price after falling short of profit and revenue expectations for the quarter.

Despite this overall uncertainty, some companies are faring well. Amazon, for instance, experienced a 2.9% gain after reporting stronger-than-expected profits for the quarter, buoyed by growth in its cloud-computing business.

In the bond market, Treasury yields have slightly eased ahead of the Federal Reserve’s announcement, with the two-year Treasury yield holding steady at 5.00%, near its highest level since November.

Internationally, many stock exchanges are closed for holidays, with Tokyo’s Nikkei 225 slipping 0.3% and London’s FTSE 100 remaining relatively unchanged.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.