Wall Street is holding steady Wednesday as it waits to hear from the Federal Reserve, which traders expect will announce a hike to interest rates later in the day to help get the nation’s high inflation under control.
The S&P 500 rose 0.4% was on track for just its second gain in the last eight days. The Dow Jones Industrial Average was down 26 points, or 0.1%, as of 12:31 p.m. Eastern time, and the Nasdaq composite was 0.7% higher.
Stocks got help from some easing for oil prices and pressure from the bond market. The price for a barrel of Brent crude, the international standard, fell 3.1% to $105.39. Oil had gotten to nearly $110 early this week on worries that the war with Iran will continue to clog the global flow of oil.
That helped send the yield on the 10-year Treasury, which is the centerpiece of the bond market and dictates where rates for mortgages and other loans go, down to 4.96% from 5.00% late Tuesday. Earlier this week was the first time since 2023 that the 10-year yield topped 5%.
Even with Wednesday’s easing, the pressure remains high. Brent oil is still well above its $72 price from before the war with Iran, when the 10-year yield was at just 3.97%. Worries are so strong about inflation staying high that Wall Street sees it as a near certainty that Fed officials will announce their first hike to interest rates since 2023 later in the day.
That’s the typical move for the Fed to combat inflation, and it works by making it more expensive for everyone to borrow money, which slows the overall economy and hopefully removes fuel for prices to rise further. It also tends to undercut prices for stocks and other investments, though President Donald Trump has been lobbying for lower interest rates instead of higher.
Inflation is a worldwide problem, and the European Central Bank hiked rates across the Atlantic last week to help diminish it.
Traders are still betting on a slight chance the Fed may hold off on raising rates. If it does, the market could swing because investors may see it as a sign that the Fed is less committed to getting inflation lower.
Fed officials will also release forecasts for where they see interest rates heading in upcoming years, providing another opportunity to inject uncertainty into the market.
A report on Wednesday morning showing that shoppers spent much more at U.S. retailers last month than economists expected could embolden the Fed. It could offer a signal that the economy remains strong enough to withstand higher rates.
On Wall Street, stocks in the artificial-intelligence industry held steadier following their worldwide slide earlier in the week, after leaders of the AI industry called for a slowdown in development to address safety issues for humanity.
Nvidia rose 1.7%, and Advanced Micro Devices climbed 3.8%.
They helped offset a drop of 12.6% for J.B. Hunt Transport Services. Its chief financial officer told a conference of analysts late Tuesday that it’s facing higher costs and expects its earnings to drop 5% to 10% from the second quarter to the third.
In stock markets abroad, indexes rose across much of Europe and Asia. South Korea’s Kospi climbed 1.4% for one of the world’s biggest gains.
AP Business Writers Chan Ho-him and Michelle Chapman contributed to this report. The Associated Press
