ASX set to rise, Wall Street steady ahead of Fed rates decision
Stan Choe
The U.S. stock market remained largely quiet on Wednesday as Wall Street awaited what the Fed would say this afternoon about where interest rates will go.
The S&P 500 is mostly unchanged and remains near its all-time high set in October. The Dow Jones gained 198 points, or 0.4 percent, and the Nasdaq composite fell 0.3 percent.
The Australian share market is poised to rise, with futures pointing to a 46-point, or 0.5 per cent, rise at the open at 4.53am AEST. The ASX fell less than 0.1 per cent on Wednesday. The Australian dollar was trading at 66.46¢ just after 5am AEDT.
GE Vernova, which rose 13.9 percent after the energy company increased its revenue forecast by 2028, doubled its dividend and increased its own share buyback program, was among the market’s biggest movers. Palantir Technologies gained 2.8 per cent after it said the US Navy would use its artificial intelligence technology as part of a US$448 million ($674 million) programme.
On Wall Street’s losing side was GameStop, which fell 4.8 percent in the latest quarter after reporting revenue that was weaker than analysts expected. However, video game retailers’ profits exceeded expectations.
Cracker Barrel Old Country Store rose 1.1 percent after swinging between gains and losses. The restaurant chain, which has caught fire over its logo design, reported better results than analysts expected in the latest quarter but also lowered its revenue forecasts and key earnings measure for this fiscal year.
In the bond market, Treasury yields retreated slightly as the countdown progressed towards the Fed’s announcement at 6am (AEDT). The widespread expectation is that it will cut the key interest rate for the third time this year in the hope of stimulating the job market.
This expectation is so strong that US stock prices have already reached the brink of records. The big question for Wall Street will be what Fed officials have to say about where they see interest rates potentially heading in 2026.
Wall Street is bracing for Fed officials to hint at fewer rate cuts in 2026 than this year, potentially fewer than the two rate cuts many traders are currently expecting, even after lowering their forecasts.
While low interest rates stimulate the economy and raise investment prices, they can also worsen inflation.
With inflation remaining stubbornly above the Fed’s 2 percent target, Fed officials are divided on whether higher inflation or a slowing job market is the greater threat to the economy.
In the bond market, the yield on the 10-year Treasury note fell to 4.16 percent from 4.18 percent late Tuesday. The two-year bond yield, which more closely tracks expectations for the Fed, fell from 3.61 percent to 3.59 percent.
In overseas stock markets, indices were mostly mixed amid moderate movements in Europe and Asia.
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