What is the stock market doing today? – The stock market rose Wednesday morning in anticipation of the Federal Reserve’s interest rate decision. At the moment, bond yields are not moving much.
Throughout midday trading, the Dow Jones Industrial Average rose 153 points or 0.5 percent, the S & P 500 advanced 0.9%; and the Nasdaq Composite jumped 1.6%.
The following are the things you should know before the stock market opens.
1. Stocks will rise after the Fed’s rate decision.
Wednesday’s market gain reflects Wall Street’s preparation for a Federal Reserve interest rate hike that is likely to be even more aggressive than the market expected just a few days ago. In the wake of last week’s higher-than-expected consumer inflation data, investors and the Fed will examine how those higher prices affected shoppers.
After being revised by 0.7% in April, the retail sales number for May was a surprise drop of 0.3%. Treasury yields declined from 2011 highs after the release of Wednesday’s data, trading at around 3.38%.
For the fifth time in a row, the Dow Jones Industrial Average and the S & P 500 fell on Wednesday. This was a small change for the Nasdaq. Stocks went up and down a lot during the day, reaching their lowest point during the last hour of trading.
Over 17 percent of the Dow’s closing value was below its January record high, still a steep correction. Both the S & P 500 and the Nasdaq continue to be in bear markets. The former is down more than 22% from January’s record, while the latter is down approximately 33% from November’s all-time high.
2. A 75-basis-point Fed hike is expected; the EBC meets in an emergency.
As part of their two-day June meeting, the Federal Reserve Board is considering an interest rate hike of 75 basis points on Wednesday. Until this week, everyone expected another 50 basis point hike. The markets are now expecting a 25 basis point hike.
At the time of writing, the Fed will announce its rate decision, and 30 minutes later, Jerome Powell will hold his usual news conference after a meeting. Inflation persists at high levels, making it more urgent for prices to be stabilized. The danger of a recession comes with aggressive Fed tightening. Investors are struggling with this dilemma.
3. The demand for mortgages is less than half of what it was last year.
As of the latest seasonally adjusted index released by the Mortgage Bankers Association, total mortgage applications are half what they were last year. Rising interest rates are making it harder for people to refinance.
This problem is made worse by sky-high home prices and a lack of houses for sale. Mortgage rates for 30-year fixed-rate mortgages increased to 5.65% last week. As of Tuesday, the 30-year mortgage hit 6.28%, according to the daily measure published by Mortgage News Daily. In late 2020, the rate reached record lows of around 2.7%, and in 2022, it started at 3.29%.
4. While gas prices are soaring, Biden blasts the high profits of refiners.
The president called on U.S. companies that refine the oil to produce more of their products, saying that consumers are facing high prices.
In a letter sent to oil companies such as Exxon and Chevron, the president said, “Historically high margins from refineries passing directly on to American families at this time of war are unacceptable.”
In his letter, Vice President Biden calls for “immediate actions to increase fuel supply.” The president’s letter comes at a time when sky-high energy costs contribute to inflationary concerns across the economy, with gas prices nationwide topping $5 per gallon.