Wall St rises ahead of Fed’s rate decision

Wall Street’s main indexes have climbed more than 1.0 per cent, boosted by gains in beaten-down growth and financial stocks, with investors waiting to see how high the Federal Reserve would raise interest rates at its policy meeting to quell inflation.

Ten of the 11 major S&P sectors advanced in early trading, with nine of them up more than 1.0 per cent.

Leading the pack were consumer discretionary and financials, which rose 1.6 per cent and 1.7 per cent respectively.

The energy sector was the lone decliner, dropping 0.5 per cent.

Market heavyweights Apple Inc, Meta Platforms, Alphabet Inc, Microsoft Corp and Amazon.com Inc added between 1.3 per cent and 2.5 per cent.

Traders are almost fully pricing in a 75 basis point hike from the Fed, up from 8.2 per cent a week ago, according to CME’s FedWatch Tool.

Such a big hike would lift the Fed’s short-term target policy rate to a range of 1.5 per cent and 1.75 per cent.

The US central bank will release its statement later on Wednesday, with a press briefing by Fed Chair Jerome Powell expected afterwards.

“The Fed is going to go 75 basis points and attempt to talk very hawkish to try to regain control of the narrative, and when it’s all over, investors will breathe a sigh of relief,” said Zach Hill, head of portfolio strategy at Horizon Investments.

“But the medium-term (market) outlook is the Fed wanting to tighten financial conditions and so that means lower equity valuations.”

Worries about surging inflation, higher borrowing costs and rising challenges to economic growth have walloped global equities this year.

The benchmark S&P 500 index on Monday marked a more than 20 per cent decline from its record closing high on January 3, confirming it has been in a bear market according to a commonly used definition.

Data showed US retail sales unexpectedly fell 0.3 per cent in May as motor vehicle purchases declined amid shortages and record high petrol prices pulled spending away from other goods.

Economists polled by Reuters had forecast retail sales gaining 0.2 per cent last month.

In early trading, the Dow Jones Industrial Average was up 315.84 points, or 1.04 per cent, at 30,680.67, the S&P 500 was up 48.12 points, or 1.29 per cent, at 3,783.60, and the Nasdaq Composite was up 179.38 points, or 1.66 per cent, at 11,007.73.

Goldman Sachs rose 2.4 per cent to lead gains among the big banks.

Nucor Corp jumped 4.6 per cent after it forecast upbeat current-quarter profit on strong steel demand.

Boeing Co surged 4.7 per cent after China Southern Airlines Co Ltd this week conducted test flights with a 737 MAX plane for the first time since March, in a sign the jet’s return in China could be nearing as demand rebounds.

Advancing issues outnumbered decliners by a 5.79-to-1 ratio on the NYSE and by a 3.81-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 30 new lows while the Nasdaq recorded seven new highs and 77 new lows.

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