Stocks rose on Wednesday as investors awaited another possible interest rate hike from the Federal Reserve as it struggles to tame rising inflation.
The Dow Jones Industrial Average rose 155 points, or 0.51%. The S&P 500 is up 0.58%, and the Nasdaq Composite is up 0.47%.
“It’s the calm before the storm – there’s a little oversold bounce here ahead of the very important Fed meeting, but very little volume,” said Ryan Detrick, chief market strategist at the Carson Group. “We know things could turn around a dime, but there is some brief optimism ahead of the Fed.”
The central bank is expected to deliver on Wednesday The third consecutive increase of 0.75 percentage points. A higher-than-expected CPI reading in August and hawkish comments on rate hikes from Fed leaders weighed on stocks, and there is likely to be more pressure going forward as the central bank continues its battle.
Investors will watch Central Bank’s long-term outlookpush close Pay attention to the final federal funds rate The last forecast was in June for it to reach 3.8% in 2023. However, some economists expect the Federal Reserve to raise that forecast above 4%. The final interest rate is the level at which the central bank will take interest rates before it stops tightening.
The forecast – and comments from Chairman Jerome Powell – should provide more insight into how high interest rates might be and how this could affect economic growth.
The S&P 500 has fallen more than 8% in the past month, giving up most of the summer’s rebound, as traders begin to fear that the Federal Reserve will raise interest rates too much and push the economy into recession. The index is flat for the week leading to Wednesday’s decision.
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