Fed to Decide Key Interest Rate This Afternoon
Focus on "Dot Plot" Outlook and Powell's Remarks
The three major indices of the U.S. New York Stock Exchange are rising in early trading on the 19th (local time). Following a decline the previous day, bargain buying is flowing in, and investors are awaiting the Federal Reserve's (Fed) decision on the benchmark interest rate, interest rate outlook, and remarks from Fed Chair Jerome Powell later this afternoon.
As of 10:24 a.m. in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks is trading at 41,838.37, up 257.06 points (0.62%) from the previous trading day. The S&P 500, centered on large-cap stocks, is up 40.7 points (0.72%) at 5,655.36, and the Nasdaq, focused on technology stocks, is trading at 17,675.43, up 171.32 points (0.98%).
By stock, Nvidia is up 1.39%. On this day, UBS added Nvidia to its global top picks, stating, "Short-term performance may be uneven due to new product cycles and supply chains, but demand for artificial intelligence (AI) computing power is structurally maintained, and Nvidia is well positioned." Boeing, the U.S. aircraft manufacturer, is up 6.51% following comments from Chief Financial Officer Brian West that cash burn has eased this quarter and factory operations have improved. Goldman Sachs downgraded Oppenheimer's investment rating from 'outperform' to 'market perform,' resulting in a 0.16% decline.
The Fed will hold its Federal Open Market Committee (FOMC) regular meeting at 2 p.m. today to decide the benchmark interest rate. According to the Chicago Mercantile Exchange (CME) FedWatch, there is a 99% probability that the Fed will keep the benchmark rate steady at 4.25?4.5% annually. The market is focusing on whether the Fed will maintain its outlook for two rate cuts this year. Amid growing concerns about stagflation (rising prices alongside economic slowdown) due to U.S. President Donald Trump's tariff policies, the Fed's economic outlook will be revealed through the dot plot showing interest rate projections. The Summary of Economic Projections (SEP), which includes forecasts for growth rate, inflation, and unemployment, will also be released. Attention is also focused on Fed Chair Powell's press conference scheduled for 2:30 p.m., immediately after the rate decision.
Michael Rosner, Managing Director at Raymond James, said, "This will be the first Fed meeting since the market began reacting negatively to trade tensions," adding, "Volatility is expected around the time of (Chair Powell's) press conference."
Scott Helfstein, Head of Investment Strategy at Global X, stated, "Powell has repeatedly said that the risks to price stability and full employment are balanced," adding, "This is still likely true, but both risks are rising, so it may be time to review long-term strategies in preparation for short-term volatility."
Recently, concerns about a tariff-induced recession have spread, causing the stock market to experience a rollercoaster ride. The S&P 500 index has fallen 10% from last week's high, entering a technical correction phase, and the Nasdaq remains in a correction phase. If dovish (monetary easing-favoring) signals are confirmed in Powell's remarks and the dot plot released after today's FOMC meeting, it is expected to act as a catalyst for a market rebound.
Government bond yields are rising. The 10-year U.S. Treasury yield, a global bond yield benchmark, is up 3 basis points (bp) from the previous trading day to 4.31%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, is moving around 4.08%, up 4 bp from the previous day.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
