Stocks look to open higher ahead of Fed decision – Yahoo Finance


Stocks opened higher as investors awaited the latest monetary policy decision from the Federal Reserve.The S&P 500 (^GSPC) rose 0.21%, or 6.11 points, as of 9:31 a.m. ET. The Dow (^DJI) rose 0.18%, or 42.11 points, while the Nasdaq (^IXIC) rose 0.51%, or 40.3 points.The Federal Open Market Committee releases its monetary policy statement at 2 p.m. ET, in which the central bank is widely anticipated to leave key interest rates unchanged at between 2.25% and 2.5%.As of Wednesday morning, CME Group’s closely monitored FedWatch tool showed markets pricing in a 97.5% probability that interest rates remain unchanged, and a 2.5% probability of a rate cut. In March, the Fed signaled that there would be no interest rate hikes this year, pointing at the time to tighter financial and geopolitical concerns.Of more interest will be Jerome Powell’s press conference at 2:30 p.m., during which the Fed chairman will provide a revised outlook for the domestic and global economy. His remarks come after the U.S. economy was shown on Friday to have grown a much better-than-expected 3.2% in the first quarter.2019 Berkshire Hathaway Annual Shareholders MeetingIn particular, investors will be looking for Powell to provide an update on the central bank’s inflation outlook, given the recent phenomenon of persistently below-target inflationary signals in the U.S. economy despite low unemployment rates. Typically, the two are inversely correlated.Through March, the year-over-year pace for core personal consumption expenditures (PCE) – the Fed’s preferred inflation metric – was 1.6%, and the core PCE reading for the first quarter of 2019 came in at just 1.3% quarter-over-quarter. The Fed has been challenged to keep the core reading near a 2% target.Further signs of a consistently strong labor market came Wednesday, with ADP/Moody’s national employment report showing that private sector employment rose by 275,000 jobs in April, or much higher than the 180,000 new positions expected.“Markets are convinced that the Fed has their back, but while caution rules at the U.S. central bank it might be difficult to say anything that will fire up the enthusiasm of equity investors,” Chris Beauchamp, chief market analyst at IG Group, said in an email. “A decline in core PCE means that the bank will retain its dovish tilt, but with GDP so strong a tilt is probably all it will be. Some post-Fed weakness in equities would not be surprising, especially now that equity markets have entered the weaker six-month period of the year.”The U.S. dollar was down slightly to below 98, and the yield on the 10-year Treasury note was lower by 1.1 basis points to 2.496% ahead of the FOMC’s policy statement release.Good AppleMeanwhile, a jump in Apple’s stock (AAPL) provided a boost to the three major indices after the big tech company posted better-than-expected March quarter results and guidance for its fiscal third quarter. Shares of Apple suppliers, including Qualcomm (QCOM), Micron Technology (MU) and Cirrus Logic (CRUS), also outperformed the broader market after Apple’s earnings beat.Company management indicated that a slowdown in iPhone sales that plagued the company at the end of 2018 has since stabilized. Service segment sales jumped 16% to a new quarterly record of $11.5 billion, consistent with the company’s new plans to expand its Services offerings to offset slowing hardware sales growth.CEO Tim Cook also provided a sunnier outlook for the company’s sales in China, which declined by just 22% year-over-year in the fiscal second quarter, from a 26% drop in the first quarter.Cooks comments on China, a geographical comprising about 18% of total second-quarter sales, detailed an improving economic picture for the world’s second largest economy, with signals of a stronger Chinese consumer helping to deflect concerns of a global economic slowdown that had been on the minds of investors since the start of the year.Shoppers pass by the Apple store logo at a shopping mall in Beijing, China. (AP Photo/Ng Han Guan, File)Apple has executed some price cuts in order to help boost demand in China, but Cook maintained that “there are two other items that are not insignificant in China that I don’t want to lose.”“The one that got the most visibility – and that happened in early April – was the VAT reduction from 16% to 13%. So it’s a very aggressive move, and there are other stimulus programs as well that likely have an effect at the consumer level,” he said.“And then finally, and this is not to be underweighted either, I think the improved trade dialogue between the countries affects consumer confidence in a positive way,” Cook said.China and the U.S. held trade talks in Beijing on Wednesday that U.S. Treasury Secretary Steven Mnuchin characterized as “productive.” Next week, Chinese Vice Premier Liu He will travel to Washington, D.C., for another round of talks as the two sides attempt to work out a trade deal.—Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcckFollow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.Read more from Emily:Tech companies like Lyft want your money – not ‘your opinion’Levi Strauss shares jump more than 30% above IPO price at openFacebook sued by Trump administration for alleged ‘discriminatory’ ad practicesBoeing 737 Max groundings ‘pressure’ U.S. economic data: Wells FargoRecession risks remain muted as fear tracks higher: Report
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