NEW YORK: Wall Street stocks opened nearly flat on Wednesday as investors await the Federal Reserve’s latest monetary policy decision, though fears of a financial crisis are easing after the recent collapse of three regional lenders.
Traders and analysts mostly expect the US central bank to hike interest rates by 25 basis points, furthering efforts to rein in inflation – though avoiding a bigger increase as policymakers seek to prevent more upheaval in the banking sector.
The Dow Jones Industrial Average picked up around 0.1 percent climbing to 32,580.59, while the broad-based S&P 500 was flat at 4,001.83.
Wall Street gains as bank contagion fears subside
The tech-heavy Nasdaq Composite Index edged down 0.1 percent to 11,853.44.
Stock markets and banking shares have risen this week after global financial authorities took measures to shore up the sector, seeking to calm fears over the swift collapse of Silicon Valley Bank and Signature Bank.
Treasury Secretary Janet Yellen told a conference Tuesday that the situation is “stabilizing,” while hinting that the United States is ready to intervene and help smaller institutions if they suffer deposit runs that pose a risk of contagion.
“If there is a ‘fear of the Fed,’ the stock market isn’t showing it so far this week,” said Patrick O’Hare of Briefing.com in a note ahead of the start of trading.
“Ironically, rising market rates are looked at as a comforting factor at this point since they were viewed as a scare factor about the banking crisis when they were screaming lower,” he added.
In a note, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote that Fed Chair Jerome Powell will likely acknowledge banking risks but argue that the threat is contained.