One America News Network By Reuters
Wall Street’s main indexes were flat on Wednesday as investors stepped onto the sidelines ahead of the Federal Reserve’s highly anticipated first interest rate cut in more than four years, with bets favoring a 50-basis-point reduction.
Borrowing costs have stayed at their highest levels in over two decades since July 2023, when the central bank last hiked interest rates by 25 basis points to between 5.25% and 5.50% to combat inflation. But the focus recently has been more about a moderating labor market.
At 9:45 a.m., the Dow Jones Industrial Average (.DJI) fell 40.18 points, or 0.11%, to 41,560.69, the S&P 500 (.SPX) gained 3.11 points, or 0.06%, to 5,637.69 and the Nasdaq Composite (.IXIC) edged up 22.76 points, or 0.13%, to 17,650.82.
Nine of the 11 S&P 500 sectors traded flat, although energy (.SPNY) and industrials (.SPLRCI) edged up 0.3% each.
The Russell 2000 index (.RUT), tracking small caps which tend to fare better in a lower interest-rate environment, crept up 0.19%.
The benchmark S&P 500 (.SPX) and the blue-chip Dow (.DJI) both recovered from an early August rout and are trading just shy of their respective record highs ahead of the Fed decision, expected at 2:00 p.m. ET.
Economic indicators over the previous one month have been relatively mixed, making investors nervous ahead of the least predictable Fed decision in years.
Following dovish commentary from present and former Fed officials recently, traders are now pricing in 61% chances of a bigger 50-basis-point reduction, according to the CME Group’s FedWatch tool.
Some analysts, however, caution that an outsized move from the central bank could spook markets.
Bets for a smaller 25-bps cut have now slipped to 39% from 86% a week ago. Investors will also be watching for comments from Fed Chair Jerome Powell at 2:30 p.m. ET to gauge the central bank’s stance on the economy and prospects of further rate cuts this year…
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