Stocks rise slightly as Wall Street awaits Fed rate decision: Live updates

The S&P 500 rose slightly Wednesday as investors looked ahead to the Federal Reserve’s latest policy decision.

The broader market index rose 0.3%, while the Nasdaq Composite also advanced 0.3%. The Dow Jones Industrial Average was up 0.1%.

The SPDR S&P Regional Banking ETF (KRE) rose 2% after falling more than 6% during Tuesday’s trading session. Shares of PacWest gained 5.2% after losing nearly 28% the prior day. Western Alliance shares were also up 2.8%.

The Fed is scheduled to release its latest policy announcement at 2 p.m. ET. Chair Jerome Powell is also set to hold a news conference at 2:30 p.m. ET.

Data from the CME Group’s FedWatch tool shows traders are pricing in an 86% chance the Fed raises rates by 25 basis points. Wall Street will also look for clues on whether the central bank will continue its rate hiking campaign, or if it will pause increases.

The announcement will come after a rough session for the market. The Dow, S&P 500 and Nasdaq all fell more than 1% on Tuesday. Ongoing concerns of contagion in the regional banking sector weighed on markets following the First Republic Bank’s collapse and subsequent takeover by JPMorgan.

“The old rule of thumb was that it takes upwards of 12 months to see the the impact of rate hikes. So we probably haven’t yet seen the impact from all of these cumulative rate hikes, including the one we’re likely to have today,” said Tom Hainlin, global investment strategist at U.S. Bank Wealth Management.

“Our view of the economy is [that] the consumer, and in particular, larger companies have been resilient coming into this tightening cycle for specific reasons,” Hainlin continued. “The consumer had came into it with a lot of cash [and] a lot of pandemic savings, so they’ve been able to draw on those. And larger companies were able to refinance themselves at low interest rates, so they kind of came into this in strong shape.”

Payroll processing firm ADP reported private payrolls data on Wednesday, which showed that hiring at private companies unexpectedly swelled in April by more than double of what economists had expected. The surge suggests that the labor market remains hot despite the Fed’s attempts to cool hiring and wage growth.