US stocks gained on Wednesday with investors looking ahead to the Federal Reserve’s monetary policy decision.
The S&P 500 Index rose 0.1% at 9:39 a.m. in New York, with the benchmark heading toward the closing record set on Feb. 19. The tech-heavy Nasdaq 100 Index was up 0.1%.
“We’re close to the all-time highs with a tremendous amount of event risk over the summer,” said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. “For most investors, now would be a good time to rebalance and get ready for additional event-related volatility over the summer.”
A hawkish signal is expected from the Federal Open Market Committee’s meeting later on Wednesday. Bloomberg Economics sees the Fed being unimpressed with four-straight soft inflation reports and leaning on internal forecasts pointing to an eventual inflation surge from tariffs.
“Markets are in wait-and-see mode ahead of the FOMC meeting, though the degree of resilience given the political uncertainty has been impressive,” said Nationwide’s Mark Hackett. “The consensus is that Chair Powell will shift modestly more dovish, though that is unlikely to be sufficient to drive markets out of the newly established trading range.”
Geopolitical tensions are adding to the heightened uncertainty faced by Fed policymakers, who are also contending with inflation and labor market risks linked to President Donald Trump’s trade agenda. Tariffs have yet to accelerate price increases, but consumers are becoming more anxious.
Hostilities between Israel and Iran continued into a sixth day. Iran’s Supreme Leader, Ayatollah Ali Khamenei, said he would not yield to Israel, defying Trump’s call for an “unconditional surrender” and raising speculation that the US may join the conflict.
“Markets will be watching to see if the US gets involved in the Iran conflict and whether the Fed’s hold today is ‘dovish’ or ‘hawkish’,” said Samana.
Meanwhile, data showed applications for US unemployment benefits ticked down last week, stabilizing near the highest levels in eight months. Initial claims matched the median forecast in a Bloomberg survey of economists.
“It is unclear to what degree recent weakness in retail sales and continuing unemployment claims are a reaction to the tariff and geopolitical noise or an indication of an inflection in the strength of the consumer,” said Hackett. “Regardless, headwinds and tailwinds are roughly in balance, setting the stage for an extended period of directionless volatility.”
Among singular stocks, Marvell Technology Inc. shares gained after the chipmaker held an event focused on artificial intelligence. Meanwhile, Norwegian Cruise Line Holdings Ltd. fell after Argus downgraded the stock on demand vulnerability.
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