Topline
The stock market opened higher on Wednesday, adding to gains earlier this week, as investors await the Federal Reserve’s latest monetary policy decision, with the central bank expected to raise rates for the first time since 2018 as it looks to combat surging inflation.
Key Facts
Stocks rose for a second day in a row: The Dow Jones Industrial Average jumped nearly 1%, roughly 300 points, while the S&P 500 rose 1.2% and the tech-heavy Nasdaq Composite 2%.
All eyes will be on the Federal Reserve as it wraps up its two-day policy meeting on Wednesday: The central bank is widely expected to raise interest rates, by a quarter percentage point, for the first time since 2018.
With inflation at 40-year highs and showing no sign of moderating soon, Investors will be looking for clues on the Fed’s rate hiking path, with experts predicting the central bank to raise rates five or six times in 2022.
Markets also got a boost from hopes of a possible ceasefire agreement in the Russia-Ukraine war, with Ukrainian President Volodymyr Zelenskyy saying in an address on Tuesday that a deal was beginning to “sound more realistic,” while Russian Foreign Minister Sergei Lavrov expressed “hope” for an agreement.
The heavy fighting in Ukraine has weighed on markets since last month, and while Ukrainian forces have held off attacks on several major cities, the country continues to call for more aid from the West, with Zelenskyy addressing the U.S. Congress on Wednesday morning.
Oil prices, which have jumped in recent weeks due to the conflict between two major exporters, at one point surged to a multi-year high of $130 per barrel before moderating somewhat and now sitting at just below $100 per barrel.
Crucial Quote:
“The main focus for Wednesday (by far) will be the Fed… although investors will also be watching for any updates out of the Russia-Ukraine peace talks,” says Vital Knowledge founder Adam Crisafulli. “More time is required to achieve an agreement,” he notes, predicting that markets could meanwhile rally on the back of the Fed news today, especially “given the present bearish setup and the fact stocks are oversold.”
What To Watch For:
Investor sentiment has grown increasingly bearish this month, with expectations for global economic growth plunging to their lowest level since the Great Financial Crisis of 2008, according to a recent Bank of America fund manager survey. Over half of those surveyed now predict that stocks will fall into a bear market this year and the U.S. economy will be plagued by stagflation—meaning high inflation and slow economic growth.
Further Reading:
Musk Challenges Putin To ‘Single Combat’ Over Ukraine—Russian Official Calls Him A ‘Little Devil’ (Forbes)
