The New York Stock Exchange opened in scattered order on Wednesday, trading within tight margins a few hours before the announcement of the decision of the American central bank (Fed), which remains unusually uncertain.
“The market consolidates while waiting for the Fed”observed Karl Haeling of LBBW. The Federal Reserve is due to announce its monetary policy decision at 18:00 GMT, before a press conference by its chairman Jerome Powell shortly afterwards.
Jerome Powell has already indicated for several weeks that the institution would probably proceed with a reduction in its key rate. But a few hours before the announcement, Wall Street has still not rallied to a central hypothesis. “There could be a marked reaction” to the Fed’s communication, warns Karl Haeling, “because the market has a level of uncertainty that we have not seen for a long time.”
In light of recent indicators, most economists are leaning toward a quarter-percentage-point cut, the standard format for rate changes. The bond market seems more in line with that view. After an initial firming on Tuesday, the yield on two-year U.S. government bonds rose again, to 3.62%, from 3.60% the previous day at the close.
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Bets are on for rate cuts
But many investors are betting on a half-point, encouraged by the fact that several Fed members have publicly considered the possibility. They gave the scenario a 63% probability.“If I were to vote, I would opt for a quarter point”explains Karl Haeling. “It’s easier to justify. You don’t have to worry about the market panicking that a recession is coming.”
While waiting for the outcome of this suspenseful saga, the New York market remained oriented upwards, encouraged by the acceleration of construction starts in the United States in August, the highest since April.
On the stock market, very few stocks stood out, with Wall Street seemingly frozen before the afternoon deadline. Despite results that exceeded expectations and confirmation of its forecasts, the food group General Mills fell (-0.71%). Investors noted the drop in turnover and a contraction in margins.
Burdened by a large debt and penalized by eroding sales, the famous Tupperware, whose name has entered common parlance, has filed for bankruptcy. No longer listed since Monday’s close, the stock remained suspended.
Aerospace group Intuitive Machines was launched into orbit (+52.59%) by the announcement of a five-year, $4.8 billion contract with NASA, for the establishment of infrastructure for frequent trips to the Moon. Earlier this year, the company had managed to land its Odysseus module on the moon, the first private probe to land on the Moon.
US Steel advanced (+1.41%) after the US government’s decision on the steelmaker’s acquisition by Japanese rival Nippon Steel was postponed until after the presidential election. President Joe Biden and the two main candidates in the race, Donald Trump and Kamala Harris, have all publicly expressed their hostility to the deal.
