U.S. stocks rose at the market open on Wednesday as Wall Street prepared for an interest rate decision from the Federal Reserve due later in the day.
Federal Reserve officials kicked off a two-day policy meeting on Tuesday morning that is widely expected to end with another quarter-point interest rate hike. That would bring the federal funds rate target range to 5%-5.25%, marking the first time it topped the 5% mark since the lead-up to the global financial crisis. The bigger question is what officials may signal about another potential tightening at their June meeting.
On Wednesday morning, government bonds were lower. The yield on the 10-year note ticked down to 3.4% while the two-year note yield dipped to 3.9%. Oil prices fell — futures for West Texas Intermediate, the U.S. benchmark, dropped nearly 3% to $69.62 a barrel — below $70 for the first time since March.
Some market participants have anticipated Wednesday’s expected rate hike could be the last of the cycle. But Chairman Jerome Powell could confirm or steer away from those assumptions.
The Fed will announce its latest policy decision Wednesday at 2 p.m. ET. Powell is set to hold a press conference at 2:30 p.m. ET.
Analysts say inflation remains sticky, the labor market is still hot but softening, and the economy is resilient. Plus, recent bank failures could set up the case for a pause, along with the Treasury Department’s new projections adding more caution to the mix as lawmakers may have less than a month to reach a debt-ceiling deal.
“Today was always likely to mark the end of the US central bank’s tightening cycle — not that it has explicitly signaled this — but we’ve now reached a stage in which every rate hike could have unwanted and unintended consequences,” Craig Erlam, Senior Market Analyst at OANDA, wrote in a research note.
“With that in mind, it would be perfectly reasonable to pause today especially when we’re already starting to see signs of the labor market softening and inflation easing,” Erlam added.
Meanwhile, the sale of First Republic Bank’s assets to JPMorgan (JPM) on Monday did not appear to have quelled investor fears in the banking sector.
The S&P 500 regional banking index (KRE) rose more 1% Wednesday after falling on Tuesday. A handful of individual regional bank stocks that bore the brunt of sell orders Tuesday, including shares of PacWest Bancorp (PACW), are up more than 7%.
Separately, hiring at private companies unexpectedly rose by 296,000 for April, above economists call for 148,000, according to payroll processing firm ADP. Next up, ISM services index results on tap Wednesday morning.
Here are some of the trending tickers on Yahoo Finance:
Ford Motor Company (F): The carmaker’s EV unit registered a $722 million quarterly loss. The automaker is nonetheless slashing the price of its all-electric Mustang Mach-E.
CVS Health Corporation (CVS): The company posted a rise in sales during its first quarter as it closed its $10.6 billion deal for Oak Street Health’s 600 primary-care centers.
Starbucks Corporation (SBUX): The coffee giant’s posted second-quarter earnings and sales expectations and notched comparable-store sales growth in China.
Icahn Enterprises L.P. (IEP): Billionaire Carl Icahn got the Hindenburg Research treatment. The short-selling research firm deemed the activist investor’s fund to be inflated by 75% or more.
Advanced Micro Devices, Inc. (AMD): The chipmaker reported a drop in margins and provided a forecast that didn’t give much indication for improvement.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv