US stocks opened higher on Wednesday as investors awaited a Federal Reserve interest-rate decision that could shape expectations for monetary policy in the coming months.
The Nasdaq Composite advanced 0.46%, and the S&P 500 gained 0.24%. The Dow Jones Industrial Average on the other hand, fell 34 points.
The move followed a two-day decline for the major indexes.
The Federal Reserve’s decision is due at 2 p.m. ET, with investors also watching Fed Chair Kevin Warsh’s remarks for clues about the inflation outlook and future rate moves.
Markets price in Fed rate hike
Futures markets were pricing in a 92.7% probability of a quarter-point rate increase on Wednesday, according to the CME FedWatch tool. The current target range is 3.5% to 3.75%.
Markets were also pricing in a 41% chance of another quarter-point increase at the Fed’s October meeting and a 27% probability of a further hike in December.
The rate decision comes as inflation remains above the Fed’s target.
Consumer prices rose 3.4% year over year in August, down from the recent high of 4.2% recorded in May.
Monthly CPI increased 0.4%, in line with expectations, while core inflation rose 0.3%, exceeding expectations.
The central bank is also facing pressure from the White House to keep rates unchanged.
However, the possibility of a rate increase has grown as energy prices have climbed and inflation concerns have persisted.
Oil prices ease as supply concerns moderate
Oil prices fell on Wednesday after reports that Saudi Arabia was offering additional crude cargoes through Oman, easing concerns about the scale of supply disruptions in the Middle East.
Brent crude futures declined 1.7% to $106.88 a barrel, while US West Texas Intermediate crude fell 2.7% to $103.
Crude prices remained above $100 despite retreating from recent highs. The elevated oil market has contributed to inflation concerns, particularly as diesel prices have also risen.
US diesel prices reached $6 per gallon for the first time on Friday amid supply constraints linked to the wars in Ukraine and Iran.
Treasury yields also remained elevated, with the 10-year yield slightly below 5% and the 30-year yield at 5.346%.
Tech stocks mixed ahead of Fed decision
Technology stocks were mixed in trading.
Nvidia and Meta gained nearly 1% each, while Microsoft edged lower and Apple gained 0.9%.
Intel rose 5.3% after reports of talks with SK Hynix over potential US memory-chip production, although SK Hynix said no plans had been confirmed.
The technology sector has also faced pressure from concerns that major artificial intelligence companies could slow the pace of model development and product releases.
Semiconductors, cloud service providers and other technology stocks were mostly lower during Tuesday’s session.
The S&P 500 fell 0.45% on Tuesday, while the Nasdaq Composite declined 0.78%, extending recent losses as investors assessed higher yields, oil prices and the outlook for AI-related spending.