Wall Street is gearing up for the Federal Reserve's policy-setting committee meeting this week, with a decision on whether to raise the benchmark Fed funds rate expected to be released on Wednesday.
While a 25-basis-point increase is likely, investors are anxious to hear Chair Jerome Powell's accompanying statement and press conference, as they may provide insights into a pause in rate hikes to assess the economy or continued action to address inflation concerns.
A higher interest rate could push depositors to pull more money from banks, but Powell has justification for increasing rates due to the recent rise in inflation. However, he could also suggest taking a break to assess the impact of past increases on the economy.
The outcome of this meeting is expected to have a significant impact on the market, and current betting indicates that the Fed is likely to keep interest rates steady at its next meeting six weeks later, on 13 and 14 June 2023.
After June, the economy may face challenges from the debt-ceiling debate between Capitol Hill and the White House, as well as the potential risk of a slower economy due to tighter credit.
This week, investors are also keeping an eye on Apple's latest earnings report, which is expected to show a slowdown from last year's pace, as well as April's nonfarm payrolls report, which is projected to show 185,000 new jobs added and a potential uptick in the unemployment rate. These major events happening simultaneously could create volatility in the market.
Fullerton Markets Research Team
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