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The Dow Jones Industrial Average advanced on Wednesday morning ahead of the latest interest rate decision from the Federal Reserve as the recent pop in oil prices eased and Treasury yields backed off multi-year highs.
The blue-chip index gained 128 points, or 0.4%. The S&P 500 added 0.2%, while the Nasdaq Composite traded near flat.
Crude oil prices declined slightly after topping $92 on Tuesday, which raised concerns higher energy prices would rekindle inflationary forces and slow the global economy.
The 10-year Treasury yield retreated on Wednesday after touching the highest level since 2007 a day before. Investors are hoping that market rates will start to reverse as inflation eases and the Fed backs off from its hiking campaign for good.
The Fed is widely expected to hold rates steady at 2 p.m. ET, but investors will be paying close attention to the summary of economic projections and the press conference of Fed chair Jerome Powell for clues as to whether the central bank will hike one more time this year.
The SPDR S&P Bank ETF (KBE) rose more than 1%, while industrial names Caterpillar and Deere climbed more than 2%, amid hopes that the Fed could successfully bring down inflation without tipping the economy into a recession.
“Instead of focusing on the federal funds rate at this meeting, market participants will be keeping a close eye on the Fed’s dot plot and Fed chair Jerome Powell’s post-meeting press conference for hints on the future path of monetary policy,” said Sam Millette, fixed income strategist for Commonwealth Financial Network.
The central bank hiked its benchmark rate in July to the highest level in more than 22 years. Fed funds futures prices signal just a slight chance of about 29% that the central bank would raise rates in November.
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