On Wednesday, the major Wall Street indexes were expected to open higher on expectations of a Chinese economic recovery. Attention was also focused on the Fed minutes from the December policy meeting in order to get insight into the trajectory of interest rate hikes.
At 2:00 p.m. ET, the minutes from the Federal Reserve’s previous meeting will be made public. At that meeting, the Fed hiked interest rates by a half-point while warning that they might need to stay higher for longer (1900 GMT).
The Fed minutes may reveal that internal discussions at the U.S. central bank are transitioning into a new stage where risks to employment and economic growth receive more weight but lowering high inflation remains the top aim.
In the meantime, premarket trading saw gains of over 6% for U.S.-listed Chinese companies like Baidu Inc., JD.com Inc., and Alibaba Group Holding Ltd. on expectations of a post-COVID rebound in China and on reports of support for the nation’s housing sector.
In order to gauge the health of the economy, investors will also be keeping an eye on ISM manufacturing data due at 10 a.m. ET and job openings data from the US Labor Department on Wednesday.
Moreover, market participants predict that the Fed will increase rates by 25 basis points in February, with rates peaking at 4.95% by June.
However, investors are expecting to see signs of softening in the job market, which could give the Fed a reason to hold off on tightening its monetary policy, in the more detailed non-farm payrolls report that is out on Friday.
In addition, the Dow Jones industrial average was up 111 points, or 0.33%, the S&P 500 was up 20.75 points, or 0.54%, and the Nasdaq 100 was up 98.25 points or 0.9% at 8:24 a.m. ET.
A decrease in U.S. Treasury yields allowed the majority of rate-sensitive technology and growth stocks, including Alphabet Inc., Amazon.com Inc., and Meta Platforms Inc., to rise between 1.2% and 1.6%.
Furthermore, Microsoft Corp. deviated from the trend and fell 2.3% after UBS downgraded the stock to “neutral” from “buy.”
Due to the enterprise software company’s plans to reduce its employees, Salesforce Inc. increased 3.9%.
