Fed Rate Hike Looms, Wall Street Braces for Potential Losses
Wall Street is bracing for potential losses on Wednesday as investors await the Federal Reserve's decision on interest rates. The widespread expectation is that the Fed will hike the federal funds rate for the first time in three years to combat inflation, which has remained above 3%.
The S&P 500 slipped 0.2%, while the Dow Jones Industrial Average fell 289 points or 0.6%. The Nasdaq composite was down 0.3% as of 9:35 a.m. Eastern time.
Oil prices have been rising, contributing to higher bond yields. The yield on the 10-year Treasury rose to 5.00%, its highest level since 2023, while Brent crude oil price increased by 0.7% to $106.42 per barrel.
Darrell Cronk, president of Wells Fargo Investment Institute, noted that investors are becoming less willing to pay premium valuations for stocks as bonds offer higher returns.