Stocks showed a mixed performance on Wednesday morning as investors eagerly awaited the Federal Reserve's latest interest rate decision. The Dow experienced a slight decline of 53 points, equivalent to 0.1%. In contrast, the S&P 500 saw a marginal increase of 0.02%, while the Nasdaq Composite edged up by 0.2%.
There is a sense of uncertainty among investors regarding whether the Fed will announce a quarter- or half-point rate cut at 2 pm ET. Typically, the central bank provides some indication of its intentions before policy meetings, but this time, the signals have been less clear.
Last week, investor sentiment leaned towards a quarter-point cut following reports of a slowdown in consumer inflation to its lowest rate since February 2021. However, some current and former Fed officials have recently expressed support for a half-point cut, leading to increased speculation on Wall Street.
Despite the historically strong US labor market, the Fed has cautioned that further cooling in this area could pose risks to the economy. Traders are currently placing a 61% probability on a half-point rate cut, compared to a 29% chance for a quarter-point reduction, according to the CME FedWatch Tool.
All eyes will be on Fed Chair Jerome Powell's press conference at 2:30 pm ET, where investors hope to glean insights into the central bank's future rate-cutting plans and the expected pace of such actions over the coming months.
