4:10pm: Stocks slump on Fed decision
Both the S&P 500 and the Dow lost ground at the close Wednesday as investors weighed the Fed's decision to hold off on any interest rate hikes for the time being.
The slump wasn't as bad as the week's earlier volatility, however, with the S&P losing 0.2% to close at 4,350 points and the Dow falling 0.4% to 34,168. The Nasdaq managed to avoid a similar fate, closing flat at 13,542 points.
2:50pm: March hike possible
During the first policy meeting of 2022, the Fed held the interest rate at near-zero, and strongly signaled that asset purchases will end in early March.
“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the policy-setting Federal Open Market Committee (FOMC) said.
Following the Fed meeting, the US stocks slumped. The Dow Jones Industrial Average shed 0.6%, or 206 points, at 34,091; while the S&P 500 and the tech-heavy Nasdaq Composite lost 0.3% and 0.5%, respectively.
Clearly, inflation is the Fed's prime concern right now, suggesting the bar for changing the hawkish narrative in the near term is exceptionally high,” commented Anna Stupnytska, a global macro economist at Fidelity International. “This is also helped by overall financial conditions which, despite the recent sell-off in equity and bond markets, remain extremely easy. This should allow the Fed to hike at 25bp increments 3-4 times this year.”
The FOMC also issued balance sheet normalization principles which indicated that runoff can start after rate hikes commence. “The Committee is prepared to adjust any of the details of its approach to reducing the size of the balance sheet in light of economic and financial development.”
“Having underestimated the breadth and persistency of inflationary pressures and having fallen significantly behind the curve as a result, it is now time for the Fed to protect its credibility as an inflation targeter,” said Stupnytska. “ But how fast and how far this tightening cycle can go depends on a number of factors along the way, not least on the inflation dynamics and the terminal level of real rates the economy and markets can digest.”
The analyst anticipates 3-4 rate hikes and that some balance sheet runoff is achievable in 2022. However, she added, “We are more skeptical on the tightening pace in 2023-24 that is currently priced in by the markets. With the debt burden so much higher after the pandemic, real rates have to remain in the negative territory for a long period of time, for the debt trajectory to stabilise at sustainable levels.”
12.05pm: US markets report strong gains
US stocks maintained their rebound around midday on Wednesday ahead of the outcome of the latest Federal Reserve policy meeting, which should provide more clarity for investors on expected future interest rate changes.
By midday, the Dow Jones Industrial Average had gained 349 points, or 1.0%, at 34,647; while the S&P 500 and the tech-heavy Nasdaq Composite jumped by 1.5% and 2.2%, respectively.
“The latest Fed decision is only hours away, but the allure of buying the dip remains too strong for many to resist,” said Chris Beauchamp, chief market analyst at online trading platform IG. “Equities have picked themselves up off the lows of the week, with price action around Microsoft providing a template for this week, where initial weakness is replaced with buying.”
Microsoft Corp reported positive quarterly revenue late Tuesday, up by 20% compared to the previous year’s earnings during the same time.
Meanwhile, the Bank of Canada kept the interest rates on hold despite signs of inflation.
“The Bank of Canada surprised markets by keeping rates unchanged, but provides a guide for what might come this evening, with its warning of rate hikes later in the year,” said Beauchamp. “The bank thinks inflation will peak later in the year, something that the Fed still likely suspects to be the case.”
11.15am: Proactive North America headlines:
Tesla forecasts the key in today’s earnings update
Nevada Silver reports promising final assay results from 2021 drilling at Corcoran Silver-Gold project in Nevada
Los Andes Copper says investors should expect a “steady stream” of drill results in 2022 from its Vizcachitas project in Chile
Taglich Brothers sees substantial growth ahead for Bridgeline Digital; maintains 'Speculative Buy' rating on the stock
Stifel GMP repeats 'Buy' on HighGold (TSX-V:HIGH, OTCQX:HGGOF) Mining after Alaska surface sampling results
Gratomic resumes its Capim Grosso graphite project drilling program in Brazil
Vejii Holdings (CSE:VEJI, OTCQB:VEJIF) says it sees its FY2022 revenue reaching C$10M to C$12M
Psyched Wellness (CSE:PSYC, OTCQB:PSYCF) says preliminary study data indicates its proprietary extract AMR-1 holds anti-inflammatory properties
NEO Battery wins final site approval for land use of 2.5 acres for NBMSiDE commercial plant facility in South Korea
Alpine 4 forms RCA Batteries Corporation, a joint venture between its RCA Commercial and ElecJet subsidiaries
Ridgeline Minerals (TSX-V:RDG, OTCQB:RDGMF) inks deal to acquire the Robber Gulch oxide gold project from EMX Royalty
Hillcrest Energy announces the addition of James Bolen as commercialization consultant
Predictmedix to launch infectious diseases clinical trial in North American hospital for FDA medical device classification of Safe Entry Stations
American Resources says it supports the proposed US Senate bill for a rare earth metals strategic reserve
Sanatana reports first copper results from Tarn Zone in its Oweegee Copper-Gold project in British Columbia
PharmaDrug initiates manufacturing of PD-001 for clinical programs in rare cancers and COVID-19
Aurania Resources updates on activity in Ecuador; suspends most field activity due to coronavirus
Audacious accelerating its multi-market entry strategy, its says in corporate update
ImagineAR announces newly voted Baseball Hall of Fame member David Ortiz hologram available on FameDays.com
Karora announces record annual gold production from Beta Hunt and Higginsville mines in Western Australia
CO2 GRO announces CO2 Delivery Solutions commercial technology purchase by US-based greenhouse grower
Adcore says its subsidiary wins multiple awards in APAC Search Awards 2022
Falcon Gold appoints publishing veteran Michelle Suzuki to its board of directors
Mednow recognized as 2022 Best Workplace – Start-upsNeo Lithium announces closing of plan of arrangement with Zijin Mining Group
Xigem Technologies (CSE:XIGM, OTCQB:XIGMF) adds seasoned professional Ezio D'Onofrio to its board
Universal Ibogaine enters deal with Psygen Labs to secure a supply of GMP ibogaine
i-80 Gold intersects high-grade gold in underground drilling at its Granite Creek property in Nevada
CytoDyn on the hunt for a new CEO as it unveils changes in leadership team
BioHarvest Sciences projects significant revenue growth for 2022 as its business approaches scaling point
9.44am: US stocks rebound midweek
US stocks rebounded midweek after the losses of yesterday amid strong earnings and as traders eye the result of a Federal Reserve meeting.
On Wall Street, the Dow Jones Industrial Average added around 218 points at 34,516. The broader-based S&P 500 added around 53 points at 4,410.
The tech-laden Nasdaq index advanced 296 points at 13,835.
The tech sector was on the up after Microsoft reported better-than-expected quarterly revenue guidance and also posted a profit of US$18.8bn for the last three months of 2021, which beat analyst expectations. Shares in New York gained 5.01% to stand at US$302.94.
The US central bank is poised to conclude its two-day meeting on Wednesday and it is widely expected that no policy changes will be made, but traders will, as usual, be on the look-out for any idea on interest rate hikes – their timings and by how much.
6.30am: US stocks seen opening up
US stocks are expected to claw back some of their recent losses when market trading gets underway as investors anticipate an indication from the Federal Reserve that it will start hiking rates in March at the culmination of its two-day Federal Open Market Committee meeting.
Futures for the Dow Jones Industrial Average rose 1% in Wednesday pre-market trading, while the broader S&P 500 index gained 1.43% and the Nasdaq 100 added 2.14%.
Stocks closed down on Tuesday - though the Dow recovered from a decline of more than 800 points for a second day late in the session.
The index ended 67 points, or 0.19%, lower at 34,298, while the S&P 500 declined 1.22% to 4,356 and the Nasdaq fell 2.28% to 13,539.
“Amid the backdrop of volatile equity markets, it would be tempting for the Fed to kowtow to the sell-off and soften its stance at the conclusion of its two-day monetary policy meeting today," commented Victoria Scholar, head of investment at interactive investor.
"However, the US economy is grappling with four-decade high inflation, a problem that the Fed must remain laser-focused on. At today’s meeting, the Fed is likely to signal plans to begin raising rates in March and to end its quantitative easing stimulus programme this quarter.
“Fed Chair Powell, who has been described as ‘Goldilocks in a suit’, will be treading a fine line, neither too hawkish nor too dovish, displaying credibility in the fight against inflation without spooking the current precarious market mood.”