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Wall Street ticks higher ahead of Fed rate decision By Reuters


©Reuters. FILE PHOTO: Morning sunlight falls on the facade of the New York Stock Exchange (NYSE) building in Manhattan in New York City, New York, U.S. January 28, 2021. REUTERS/Mike Segar/File Photo

By Ankika Biswas and Johann M. Cherian

(Reuters) – Wall Street’s major stock indices rose cautiously on Wednesday as investors held back from big bets ahead of a Federal Reserve interest rate decision later in the day.

The US central bank is widely expected to raise the Fed Funds rate by half a percentage point to 4.25-4.50%. The decision will be announced at 2pm ET (1800 GMT), followed by Chairman Jerome Powell’s press conference.

Concerns about the Fed sticking to rate hikes dampened an early rally on Wall Street on Tuesday after data showed US consumer prices rose at their slowest pace in about a year in November.

“The stock market will reward improving inflation for a while. We’re still in the sevens (inflation rates) and I think you can get down to four without unemployment rising, but it’s going to be very difficult to get back to the target rate. ,” said Andrew Slimmon, general manager of Morgan Stanley (NYSE:) Chicago asset management.

“The market knows that the forward indicators, such as the yield curve, are a warning that the economy could become more difficult going forward, and it suggests that we could also face earnings problems.”

The US Federal Reserve has raised its policy rate by 375 basis points so far this year to a range of 3.75%-4.00% from near zero, the fastest rate hikes since the 1980s.

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Strategists at Morgan Stanley expect the central bank to raise rates by another 25 basis points at its February meeting, but see no increases after that, leaving the highest Fed Funds rate at 4.625%.

By contrast, money market participants expect two more increases of 25 basis points next year, which will push the closing rate to 4.82% in May.

Fears that aggressive rate hikes by major central banks will push the global economy into recession have weighed on risky assets such as equities.

For the year, the and the Nasdaq are down 15.3% and 27.9%, respectively, and are on track for their worst annual performance since the 2008 financial crisis.

The price-sensitive S&P 500 real estate sector index and growth index have witnessed double-digit declines in 2022 on the back of the Fed’s rapid rate hikes.

At 9:53 a.m. ET, the S&P 500 was up 137.28 points, or 0.40%, to 34,245.92, the S&P 500 was up 14.07 points, or 0.35%, to 4,033.72, and was up 20.00 points, or Increased 0.18% to 11,276.82.

Eight of the 11 major S&P 500 sectors were green, led by technology and utilities.

Megacap growth stocks like Microsoft Corp (NASDAQ:), Apple Inc (NASDAQ:), Mastercard Inc (NYSE:) and Qualcomm (NASDAQ:) Inc gained between 0.9% and 1.1%.

Tesla (NASDAQ:) Inc fell 2% after a Goldman Sachs (NYSE:) analyst lowered the electric vehicle maker’s share price target.

Charter communication Inc (NASDAQ:) fell 13.9% as multiple brokers lowered their price targets due to the telecom company’s massive spending plans for faster Internet upgrades.

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Delta Air Lines Inc (NYSE:) rose 2% as the Atlanta-based airline expects to nearly double its profits next year.

Emerging issues outnumbered them with a ratio of 1.35 to 1 on the NYSE and 1.12 to 1 on the Nasdaq.

The S&P index registered three new highs in 52 weeks and no new lows, while the Nasdaq recorded 23 new highs and 83 new lows.

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