Portfolio

US open: Stocks slip ahead of Fed policy announcement

By Alexander Bueso

Date: Wednesday 20 Mar 2019

US open: Stocks slip ahead of Fed policy announcement

(Sharecast News) - Wall Street's main stockmarket gauges were moving lower on Wednesday as investors opt to stay on the sidelines ahead of the latest policy announcement from the Federal Reserve.
By 1604 GMT, the Dow Jones Industrial Average was off by 0.51% to 25,756.06, alongside a fall of 0.45% to 2,819.75 for the S&P 500 and a decline of 0.34% to 7,697.40 for the Nasdaq Composite.

From a sector standpoint, the worst performing areas of the market were: Trucking (-3.19%), Railroads (-2.1%) and Health Care (-2.08%).

With the US central bank widely expected to keep interest rates unchanged and deliver a more 'dovish' message, investors were pushing yields on benchmark 10-year US Treasury notes down by three basis points to 2.59%.

Neil Wilson, chief market analyst at Markets.com, said: "We should expect the Fed to reiterate its patient approach to raising rates. The problem for markets is that the dovishness is largely expected so the bar for a 'dovish surprise' from Powell is rather high.

"All the focus will be on the fresh set of projection materials and it's this that will matter for markets.

"We should expect a shift down in the dots to underscore the more dovish stance. The last dot plot in December was a lot more hawkish than the current market expectations suggest and it would seem likely that the Fed will fall into line with the market.

"The median dot in Dec was brought down to 2.9%, still signifying a couple of hikes in 2019. Even one now looks unlikely and so we should expect the median dot to come down to around 2.7%.

"However, we should remember, the January meeting minutes underscored that several FOMC members still think there will more hikes in 2019. The key message from the January minutes was this: "Several other participants indicated that, if the economy evolved as they expected, they would view it as appropriate to raise the target range for the federal funds rate later this year'."

In corporate news, FedEx shares were down 5% after the company cut its profit forecast for this year for the second time in three months late on Tuesday and posted weaker-than-expected third-quarter results.

Pfizer was also in focus after the pharmaceutical group said it has bought a 15% stake in Vivet Therapeutics and now has an exclusive option to fully buy the privately-held French gene therapy company.

Google parent Alphabet could also be in the spotlight after the EU slapped Google with a €1.5n fine for blocking rival online search advertisers.

The Fed rate announcement and policy statement are at 1800 GMT.



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