Federal Reserve rate decision/ stock market news/ bond market trends/ Nvidia stock gains/ global economic updates/ NEW YORK/ Newslooks/ J. Mansour/ Morning Edition/ U.S. stock indexes rose modestly Wednesday as Wall Street awaited the Federal Reserve’s interest rate decision. The S&P 500 gained 0.3%, driven by strong performances from companies like Jabil and Nvidia. Investors remain focused on potential rate cuts in 2025 and their economic implications.
Stock Market Rises Ahead of Fed Decision: Quick Looks
- Market Performance: S&P 500 up 0.3%; Dow Jones gains 220 points.
- Top Performers: Jabil (+8.4%) and Nvidia (+4.3%) led market gains.
- Fed’s Focus: Expected to announce a third rate cut this year.
- Bond Market: 10-year Treasury yield holds steady at 4.39%.
- Global Stocks: FTSE 100 edges up; Nikkei 225 dips 0.7%.
- Economic Context: Concerns about inflation and Trump’s economic policies linger.
- Upcoming Events: Bank of England and Bank of Japan to announce rate decisions.
Wall Street Edges Higher Before Federal Reserve Decision
Deep Look
Wall Street Waits on Fed Decision
The U.S. stock market showed modest gains Wednesday morning as investors looked ahead to the Federal Reserve’s expected announcement of its third interest rate cut this year. The S&P 500 rose 0.3%, nearing its record high, while the Dow Jones Industrial Average added 220 points, or 0.5%. The Nasdaq composite also climbed 0.3%.
Market activity has been relatively subdued, with traders anticipating Fed Chair Jerome Powell’s press conference for signals about the pace of rate cuts in 2025.
Leading Performers
Electronics company Jabil led market gains with an 8.4% jump after reporting better-than-expected quarterly profit and revenue. The company also raised its forecast for annual revenue, boosting investor confidence.
Nvidia, a key driver of Wall Street’s rally in recent years, rebounded 4.3% after a weekslong slump. The chipmaker had seen a 12% drop from its record high last month but showed renewed momentum on Wednesday.
On the downside, General Mills fell 2.8% despite exceeding profit expectations. The company announced plans to increase brand investments, prompting a reduction in its full-year profit forecast.
Federal Reserve’s Next Moves
The Federal Reserve is widely expected to cut its benchmark interest rate by 0.25%, lowering it from 4.6% to 4.3%. This follows earlier rate cuts aimed at easing inflation, which has dropped to 2.3% from its peak of over 9%.
The central bank is nearing a “neutral” rate—one that neither stimulates nor restricts economic growth. Investors are keen to learn whether the Fed will continue reducing rates in 2025, especially as inflation shows signs of acceleration.
Economic policies under President-elect Donald Trump could complicate the outlook. Proposals for tariffs and other measures to stimulate growth may further drive inflation, challenging the Fed’s ability to balance economic activity and price stability.
Treasury Yields Hold Steady
Treasury yields remained relatively unchanged as the bond market also awaited the Fed’s announcement. The 10-year Treasury yield dipped slightly to 4.39%, while the two-year yield, closely tied to Fed rate expectations, fell to 4.22%.
Global Market Trends
International markets showed mixed results:
- United Kingdom: London’s FTSE 100 rose less than 0.1% as inflation data revealed an uptick to 2.6% in November.
- Japan: The Nikkei 225 fell 0.7% despite a 23.7% surge in Nissan’s stock. The automaker confirmed talks with Honda on potential collaboration but denied any merger decisions.
In Japan, the Bank of Japan will conclude its policy meeting on Friday, following interest rate decisions from the Federal Reserve and the Bank of England.
Broader Economic Implications
As central banks worldwide adjust their monetary policies, the Federal Reserve’s decision will play a crucial role in shaping investor sentiment for 2025. The market’s focus remains on balancing inflation control with economic growth, particularly amid uncertainties surrounding the global economy and U.S. policy shifts.
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