Today the Federal Reserve is opening a two-day policy meeting. The interest rate decision will be unveiled on Wednesday. Until then, Wall Street is revising forecasts and digesting corporate reports. The economic calendar will complement the full picture. InstaForex analysts will help you assess the risks.

Fears, caution, and a low trading volume set the stage for a decline in the benchmark stock indices. The culprit for a decline was the high-tech and energy sectors. The Dow Jones lost 260 points or 0.77% yesterday. The Nasdaq printed the worst losses of 1.96%. The S&P 500 was 0.30% down to close at 4,017.
The indices did not revive optimism on Tuesday. The major stock indices extended their losses as investors are cautious ahead of the Fed’s policy decision. A variety of factors are able to influence market sentiment today. Still, investors prefer the wait-and-see approach. The S&P 500 is expected to trade in the intraday corridor between 3,970 and 4,050.  
Wall Street was hit by another sell-off. The high-tech sector tumbled by 1.9%. The energy sector slumped by 2.3% amid falling oil prices.

The stock market halted its climb and is now trading quietly ahead of policy meetings of major central banks. Besides, rising yields of US Treasuries are putting a lid on risky assets.

Despite a decline on Monday, the S&P 500 is on track to its biggest growth since 2019. According to Refinitiv, more than 140 companies have reported on their corporate earnings. The aggregate profit of the companies in the S&P 500 could have contracted by 3% in the fourth quarter from a year ago.

As for the corporate news, Johnson & Johnson’s shares fell by 3.7% after a panel of federal appeals judges rejected its lawsuits over its talc products causing cancer.

The market is now focused on the pending Fed’s decision. The central bank signaled its intention to raise the funds rate by 25 basis points, the smallest rate hike in the last 10 months. So, investors hope for a pause in aggressive monetary tightening.

The market is wondering whether the Fed officials will signal further rate hikes.

Now market participants project the federal funds rate to reach the ultimate level at 4.75-5% in March that will be followed by rate cuts. If the forecast comes true, this will encourage the stock market and risky assets will come under pressure.

On early Tuesday, investors found promising signs. According to a business activity survey released today, China’s economic activity got back on track in January after a three-month contraction. Besides, the EU GDP edged up by 0.1% in the fourth quarter defying the consensus of a 0.1% downtick.

In this context, the International Monetary Fund upgraded the global economic forecast for 2023 on the back of remarkably buoyant demand in the US and Europe.

The IMF expects the global GDP to drop to 2.9% in 2023 from 3.4% in 2022. The IMF foresees acceleration in the global GDP to 3.1% in 2024.

As for the economic calendar, the US employment cost index showed some signs of cooling down. Employment spending in the US grew by 1% in the final quarter of 2022, down from a 1.2% increase in the previous quarter and slightly below the consensus of 1.1%. Moreover, wages rose by 1% and employment benefits climbed by 0.8%, down from 1.3% and 1% respectively in the previous third quarter.

In the early New York session, the market will get to know the consumer confidence index by the Conference Board.

The high-tech sector remains under selling pressure. The Chinese stocks listed on US exchanges fell by 1.7% as media reported that Biden’s administration stopped approving licenses for US companies to export most items for 5G and other technologies to China’s Huawei. The news confirms renewed jitters in the US - China technological war. ExxonMobile, Pfizer, McDonald's, Caterpillar, and AMD are due to present their corporate reports later today. They could encourage the appropriate sectors.
The US dollar eventually got a second wind and recovered from pessimism. Having gained 0.31% intraday, the index climbed to 102.56 and later slipped to 102.4. The intraday corridor for the US dollar index is seen between 101.9 and 102.8.

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00:00 INTRO
00:27 S&P500
01:23 USA
02:58 QUOTES
03:53 US EMPLOYMENT COST INDEX, Q/Q
05:02 USDX
06:44 USD | CAD
07:03 OIL
07:35 CANADA’S GDP, M/M (NOVEMBER)
07:59 BTC | USD