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NEW YORK (AP) — Stocks were volatile in morning trading on Wall Street Wednesday as markets awaited the latest announcement from the Federal Reserve on interest rate policy and guidance on the timing and size of potential rate cuts later this year.
The S&P 500 is almost unchanged and is hitting new all-time highs. As of 10:46 a.m. ET, the Dow Jones Industrial Average was up 6 points, or less than 0.1%, while the Nasdaq Composite was down 0.1%.
In the bond market, US Treasury yields remained relatively stable.
Mexican restaurant chain Chipotle announced its first-ever stock split, sending its stock soaring 6%. Cheerios maker General Mills rose 2.2% after reporting earnings that easily beat analysts’ expectations.
The Fed begins its latest meeting on interest rates on Tuesday and is expected to announce a decision later Wednesday. There are widespread expectations that the central bank will keep its key interest rate unchanged at the highest level in 20 years. Investors are still hoping the Fed will cut interest rates three times this year, as it signaled months ago.
Stocks have soared to record levels on hopes that the Federal Reserve will move closer to lowering interest rates, easing pressure on the economy and financial system. Wall Street expects the central bank to begin lowering benchmark interest rates at its June meeting.
The central bank has begun raising interest rates in 2022 to bring inflation back to its 2% target. Inflation has generally slowed since then, with consumer prices falling from a high of 9.1% in mid-2022 to 3.2% in February. At the same time, despite concerns from these tight interest rates, consumers continued to spend and the economy grew. Raising interest rates could cause an economic recession.
Wall Street is concerned about the challenges the Fed faces in further easing inflation going forward. However, recent reports on inflation have consistently been worse than expected. As a result, there are growing concerns that the Federal Reserve will scale back its interest rate cuts this year. The central bank is expected to receive an inflation update next week, including February data on its priority indicator, which focuses on consumer spending and spending.
European and Asian markets were mixed. Japanese markets were closed for a public holiday, a day after the Bank of Japan raised its benchmark interest rate for the first time in 17 years, raising interest rates from -0.1% to a range of zero to 0.1%.
London’s FTSE 100 index rose 0.1% after the UK’s inflation rate fell below market expectations of 3.4% in February, the lowest level since September 2021. This supports expectations for rate cuts in the coming months.
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Zimo Zhong contributed to this report.
Damien J. Troise, Associated Press
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