Stocks rose Wednesday as traders awaited another likely interest rate hike at the conclusion of the Federal Reserve’s September meeting.
The Dow Jones Industrial Average gained 171 points, or 0.56%. The S&P 500 climbed 0.57%, and the Nasdaq Composite added 0.34%.
The central bank on Wednesday is expected to deliver its third consecutive 0.75 percentage point rate hike to tame high inflation. A higher-than-expected consumer price index reading in August and hawkish comments on rate hikes from Fed leaders have weighed on stocks, with more pressure likely ahead as the central bank continues to fight inflation.
Investors will be monitoring the central bank’s longer-term projections and comments from Chairman Jerome Powell for insight into how much more interest rates can go up and how that could impact economic growth.
“Our sense is that markets could be set up for a short-lived relief rally if the Fed hikes by +75bps and Powell doesn’t ratchet up his hawkish rhetoric even further,” wrote Wolfe Research’s Chris Senyek in a note to clients. “That said, we don’t anticipate having to change our intermediate-term bearish call.”
Earnings results from Lennar, KB Homes, and Steelcase are also slated for release Wednesday. General Mills’ stock gained more than 2% in the premarket as it upped its full-year outlook. Existing home sales are due out Wednesday morning.
Treasury yields dipped Wednesday after reaching levels not seen in more than a decade. The 2-year rate, which touched its highest level since 2007 in the previous session, was last down about 2 basis points at 3.948%. The benchmark 10-year yield slipped to 3.54% after hitting its highest level since 2011.
Stocks fell Tuesday, the first day of the Federal Open Market Committee’s meeting. The Dow shed 1.01%. The S&P 500 and the Nasdaq Composite fell 1.13% and 0.95%, respectively.