Stocks drift higher as traders brace for Fed decision

US stocks were little changed Wednesday morning as investors anticipated the Federal Reserve’s latest monetary policy decision amid high inflation and a still-tight US labor market.

The S&P 500, Dow and Nasdaq followed the flatline. Treasury yields rose across the curve and the benchmark 10-year yield hovered just below 3%, near its highest level since late 2018.

Investors await the Federal Reserve’s monetary policy statement and Chairman Jerome Powell’s press conference later Wednesday afternoon. The central bank is expected to raise interest rates by 50 basis points for the first time since 2000. Such a hike would be double the 25 basis point increase triggered by the Fed in mid-March, which was it -even the first rate hike since 2018. This would bring the target range for the federal funds rate to between 0.75% and 1.00%, up from the current range of between 0.25% and 0.50%.

Expectations for this oversized rate hike have been building for weeks among market participants, especially given comments from top Federal Reserve officials appearing to support such a move. Powell said during a public appearance with the International Monetary Fund earlier this month that he thought it would be “appropriate…to move a little faster” on the rate hike, and that 50 basis points were “on the table” for May. And the Fed is also expected to use the May meeting to announce the start of quantitative tightening, or the removal of assets from the central bank’s $9 trillion balance sheet.

The prospect of higher interest rates has stoked volatility in equity markets, which over the past two years had grown accustomed to ultra-low interest rates and generally silver-friendly monetary policies. At the same time, however, many pundits have suggested the Fed has let its supportive pandemic-era policies last too long, allowing inflation to soar to the fastest rates since the 1980s. And after GDP growth turned negative in the United States in the first three months of the year, the question remains whether the Fed will now be able to tighten policies without tipping the economy into a tailspin. deep slowdown.

“Because the market forecast a 50 basis point rate hike at the Federal Reserve’s May meeting, attention will immediately shift to how many half-point hikes the Fed expects to make. initiate over the remainder of 2022,” said Danielle DiMartino Booth, CEO. and chief strategist at Quill Intelligence, wrote in an email Tuesday. The Fed would shock markets if it failed to implement more aggressive policy via a 50 basis point rate hike on Wednesday.”

“The Federal Reserve’s credibility is at stake, given the surge in inflation, which has proven to be anything but transitory,” Booth added. “Interest rates are too low and the markets are all too used to nearly unlimited cash flow from Fed bond purchases. Powell’s greatest folly would be to insist that the economy is very strong in the face of overwhelming evidence that she is slowing down and slowing down fast.”

9:35 a.m. ET: Stocks open little change

Here are the top moves in the markets as of 9:33 a.m. ET:

  • S&P 500 (^GSPC): +1.28 (+0.03%) to 4,176.76

  • Dow (^ DJI): +4.50 (+0.01%) to 33,133.29

  • Nasdaq (^IXIC): -20.90 (-0.15%) to 12,544.49

  • Raw (CL=F): +$4.65 (+4.54%) at $107.06 per barrel

  • Gold (CG=F): unchanged at $1,870.60 an ounce

  • 10-year cash flow (^TNX): +1.9 bps for a yield of 2.9790%

8:30 a.m. ET: US private sector payrolls missed expectations in April, rising 247,000 vs. 383,000 expected

The wage bill has increased less than expected in the US private sector last monthas employers worked for fill persistent vacancies to help meet demand.

The private sector payroll rose by 247,000 in April, ADP said in its closely watched monthly report on Wednesday. This follows an increase of 479,000 private jobs in March, according to ADP’s revised monthly print. Consensus economists expected private payrolls to rise by 383,000, according to Bloomberg data.

The services sector in the United States recorded the largest gains in private payrolls last month, with almost all industry groups adding jobs. However, job growth slowed from March, contributing to the overall deceleration in total private payroll gains. Leisure and hospitality employers added 77,000 jobs in April, which, while still the largest of all industry groups, accounted for less than half the gain in payrolls from March. Next came professional and business services, with payrolls up 50,000 in April, and education and health services with gains of 48,000. In the goods-producing sector, payrolls increased net in each of the manufacturing, construction and mining industries.

Also, by size of business, small businesses experienced a marked drop in employment last month. Small businesses, or those with 49 or fewer employees, lost a total of 120,000 jobs last month, while medium and large businesses gained 46,000 and 321,000, respectively.

7:39 a.m. ET: Uber reports better-than-expected quarterly results, tips

Uber (UBER) on Wednesday morning released first-quarter results and guidance for the current quarter that beat estimates, with the ride-hailing company signaling that it was working through driver shortages while maintaining strong profitability.

Revenue more than doubled in the first quarter to $6.9 billion, beating estimates of $6.1 billion, according to data compiled by Bloomberg. Adjusted EBITDA increased to $168 million, also beating the expected $135 million. Rides during the first quarter rose 18% from a year ago to 17.1 billion, underscoring the continued recovery in passenger demand.

For the current quarter, Uber said it expects gross bookings of between $28.5 billion and $29.5 billion and adjusted EBITDA of between $240 million and $270 million.

Uber shares pared losses in early trading after the results. Earlier in the overnight session, Uber shares fell in sympathy with Lyft shares, which slid after the ride-hailing company offered current-quarter revenue and profit forecasts that were below analysts’ expectations.

Uber was previously scheduled to release quarterly results after the market close on Wednesday, but after Lyft’s report, “postponed to provide an earlier update on the company’s performance and direction ahead of the market open.” according to a press release.

7:29 a.m. ET Wednesday: Equity futures gain

Here’s where the markets were trading before the opening bell

  • S&P 500 Futures Contracts (ES=F): +16.75 points (+0.4%) to 4,186.00

  • Dow futures (JM=F): +122 points (+0.37%) to 33,155.00

  • Nasdaq futures contracts (NQ=F): +44.75 points (+0.34%) to 13,132.25

  • Raw (CL=F): +$3.88 (+3.79%) at $106.29 per barrel

  • Gold (CG=F): -$4.30 (-0.23%) at $1,866.30 per ounce

  • 10-year cash flow (^TNX): +0.4 bps for a yield of 2.962%

6:01 p.m. ET Tuesday: Mixed Open Stock Futures

Here’s where the markets were trading Tuesday night:

  • S&P 500 Futures Contracts (ES=F): +1.5 points (+0.04%) to 4,170.75

  • Dow futures (JM=F): -2 points (-0.01%) to 33,031.00

  • Nasdaq futures contracts (NQ=F): +22.75 points (+0.17%) to 13,110.25

NEW YORK, NEW YORK - APRIL 28: Traders work on the floor of the New York Stock Exchange (NYSE) on April 28, 2022 in New York City.  The Dow Jones Industrial Average was up in morning trading as markets continued to go through a period of volatility due to inflation fears and the war in Ukraine.  (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – APRIL 28: Traders work on the floor of the New York Stock Exchange (NYSE) on April 28, 2022 in New York City. The Dow Jones Industrial Average was up in morning trading as markets continued to go through a period of volatility due to inflation fears and the war in Ukraine. (Photo by Spencer Platt/Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.

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