As Wall Street Prepares for the Fed’s Rate Announcement, Stocks Decline

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Last Updated on November 2, 2022 by Bitfinsider

As investors anticipated the Federal Reserve’s latest rate announcement at the conclusion of its policy meeting, stocks declined on Wednesday.

The Dow Jones Industrial Average fell 130 points, or 0.4%, on Tuesday. The S&P 500 and Nasdaq Composite each declined by 0.5%.

As it confronts high inflation, it is largely anticipated that the Fed would announce a 0.75 percentage point rate increase, its fourth consecutive increase of this magnitude. Investors are also searching for an indication that the central bank may pause its rate-hiking timetable in December.

The Fed and its chair, Jerome Powell, will play a crucial role in understanding the direction of equities in the next months and determining if the markets will launch a new bull run.

“Continuation of the year-end surge is predicated on the Fed delivering on the pivot narrative,” Emmanuel Cau of Barclays said in a client note on Wednesday. “Peak hawkishness may increase fear of missing out, but it should not be confused with dovishness, as central banks continue to tread a delicate line. In the past, rate decreases were required for equities to begin a fresh bull run; we are not there yet.

The central bank’s decision will be made after the release of positive employment data, with private payrolls data for October indicating a robust labor market. Despite the Fed’s aggressive rate of tightening, Tuesday’s JOLTS report indicated a tight labor market.

In other economic news, last week’s mortgage application numbers were unchanged despite a small decline in interest rates.

CVS Health continued the earnings season with solid results. Advanced Micro Devices increased despite a revenue and profit shortfall.

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