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Three main U.S. indexes rise, Nasdaq up ~0.3%
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U.S. services ISM rises to 51.9 in Apr vs 51.8 est
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Euro STOXX 600 index up ~0.3%
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Dollar, bitcoin decline; gold ~flat; crude down ~4%
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U.S. 10-Year Treasury yield falls to ~3.39%
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WALL STREET RALLIES AHEAD OF FOMC POLICY STATEMENT (1010
ET/1410 GMT)
Stocks on Wall Street are edging higher in early trade on
the belief that the Federal Reserve, regardless of its statement
later on Wednesday, is poised to pause and then cut interest
rates on concerns a credit crunch will lead to a recession.
A majority of the 11 S&P 500 sectors are higher, led
by industrials , while energy is taking the
biggest hit.
The Dow Transports , and small caps are gaining, while regional banks are snapping back more than 2%. Chip stocks are lower.
Data showed the U.S. services sector grew at steady pace in April as new orders increased amid a surge in exports, but businesses continued to face higher prices for inputs, indicating that inflation could remain elevated for some time. The Institute for Supply Management (ISM) said that its non-manufacturing PMI edged up to a reading of 51.9 last month from 51.2 in March. Economists polled by Reuters had forecast the non-manufacturing PMI would tick up to 51.8. The market has a strong belief that the Fed is going to pause and will be forced to quickly pivot from rate hikes to rate cuts, says Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA LLC in New York. Recent price data suggests inflation is proving to be sticky as it decelerates, which should imply a "higher for longer" policy response from the Fed. But markets are fixated on the view that a systemic credit issue is lurking, Ricchiuto said. "This policy pivot call is central to relatively expensive valuations in bonds and stocks as well as the U.S. dollar," he said in a note on Wednesday. As for the Fed's statement and press conference later, Chair Powell "is going to try to present a balanced view because he has a divided committee. So, therefore you're going to find whatever you want and the bulls are going to run with it." Below is a snapshot of early market prices:
(Herbert Lash)
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DOW INDUSTRIALS: LEVELING UP AHEAD OF THE FED (0900 EDT/1300 GMT) Ahead of the results of Wednesday's highly anticipated Fed meeting, the Dow Jones Industrial Average has become increasingly volatile:
Last Wednesday, daily volatility close-to-close ended at its lowest level since the DJI's Jan. 4, 2022 record-high finish. This indicator ended Tuesday at a one-month high.
For nearly three weeks now, the Dow has been oscillating around trendline resistance from its Jan. 5, 2022 record intraday high. With its 33,684 Tuesday close, the DJI ended back below this line, which should reside just shy of 33,800 on Wednesday. In the wake of April ADP private employment coming in well above estimates, e-mini Dow futures are suggesting the DJI is poised to edge up at the open. Thus, the line will present a hurdle in early trade. In any event, traders are braced for the potential for even greater volatility as the market ultimately digests the results of the Fed meeting and chair-Powell's press conference. On strength above the resistance line, Monday's high was at 34,258, and just above here are the January-February highs packed in a tight range at 34,331, 34,335 and 34,342. The December 13 high was at 34,712. On a break below last Wednesday's 33,235 low, the 50-day moving average (DMA) ended Tuesday around 33,065. The 200-DMA ended around 32,685. Meanwhile, both the S&P 500 and Nasdaq Composite are also just shy of key chart hurdles.
(Terence Gabriel)
*****
FOR WEDNESDAY'S LIVE MARKETS POSTS PRIOR TO 0900 EDT/1300 GMT - CLICK HERE
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
