Wall St wavers ahead of first Fed policy decision under Warsh

NEW YORK: US stock indexes wavered in choppy trading on Wednesday, as investors awaited the first interest rate decision under new Federal Reserve Chair Kevin Warsh.

The indexes have stalled after a sharp rally on Monday when President Donald Trump announced a preliminary US-Iran peace deal that sent oil prices tumbling and eased inflation fears.

Shares of highly valued chipmakers rebounded from Tuesday’s drop. Broadcom rose 5.7 percent and Micron Technology gained 3.7 percent.

Elon Musk’s SpaceX fell 3 percent and was set to end lower for the first time since last week’s blockbuster market debut, which pushed the company’s market valuation above USD2 trillion.

Other heavyweights, including Amazon and Alphabet , also lost steam.

Banks were a bright spot. Shares of Bank of America, Citigroup and Goldman Sachs touched record highs in late morning trading.

Traders are keenly waiting for the Federal Reserve’s monetary policy decision, which is set to be announced at 2:00 p.m. ET.

Policymakers are widely expected to hold interest rates unchanged at the 3.50 percent-3.75 percent range as they wrestle with inflation pressures from higher oil prices fueled by the Middle East war.

Investors will also keep a close watch on the new Fed chair’s first press conference for his views on inflation, unemployment and the economic outlook.

“I’m of the camp that the Fed should really continue to take a wait-and-see approach. Based on the data today, I would expect that the Fed will not move this year at all,” said Jack Ablin, chief investment officer at Cresset Capital Management.

Data showed US retail sales increased more than expected in May, with households purchasing more cars and other vehicles even as they paid higher prices for gasoline.

Traders see the Fed holding rates through much of the year, but are betting on a nearly 43 percent chance of a 25-basis-point rate hike in December, according to CME Group’s FedWatch tool.

At 11:54 a.m. ET, the Dow Jones Industrial Average rose 229.58 points, or 0.44 percent, to 52,229.25, the S&P 500 gained 3.97 points, or 0.05 percent, to 7,515.32 and the Nasdaq Composite lost 7.15 points, or 0.03 percent, to 26,369.20.

US stocks have partially recovered from an early June slump, with the blue-chip Dow touching record highs for the past two sessions, as a resilient US economy, broadening of the rally beyond tech shares and falling oil prices aided sentiment.