Wall Street is anticipating the outcome of the big story of the recent weeks. The market is alert to the Fed’s response to the banking crisis. The regulator has to adjust its policy decision to high stubborn inflation and the fallout from aggressive monetary tightening that dealt a blow to banks.

All in all, the market has been gripped by high volatility and investors have been speculating on further monetary policy. Today, they will solve the puzzle. The Federal Reserve will unveil its policy update that will be accompanied by Jerome Powell’s press conference.

Wall Street is looking forward to the crucial event in the elevated mood. Stock investors shrugged off fears about liquidity in the banking sector. The benchmark stock indices went up. The major stock indices closed with gains for a second day in a row. The Dow Jones climbed by 316 points or 0.98%. The Nasdaq jumped by 1.58%. The S&P 500 surged to 4,002 and closed 1.30% up.
Investors were in limbo in the New York pre-market. The top indices traded mixed, fluctuating around the levels reached yesterday. Further dynamics will depend entirely on the Fed’s rhetoric. The market may both rally or fall. So, the S&P 50 is expected to trade in a wide corridor between 3,870 and 4,120.
On Tuesday, the energy sector, consumer sector, and the financial sector inside the S&P 500 logged the strongest growth. Shares of the banking sector rebounded, extending the gains of Monday. The banking sector of the S&P 500 and the regional banking index rose by 3.6% and 4.8% respectively. It is the biggest growth since late 2022.
Speaking for American bankers, Treasury Secretary Janet Yellen stated that the US banking system was again on sound footing thanks to resolute actions of regulators. She warned that extra measures might follow.
Shares of First Republican Bank rallied by 29.5%, the sharpest intraday growth. The reason is that JPMorgan CEO Jamie Damon is negotiating with other large banks abut investments in the ailing lender.
Shares of PacWest and Western Alliance also surged by 18.8% and 15.0% respectively.
Tesla shares climbed by 7.8% after the e-car manufacturer reported extremely upbeat quarterly results for China.
Eventually, 8 out of 11 sectors in the S&P 500 closed yesterday in the green with the energy stocks showing the biggest gains.
Today traders are shifting focus to the US central bank. Futures on US stock indices traded cautiously in the pre-market. The US Fed will unveil its decisions and state its agenda for further policy after the opening bell.
While the Fed’s policymakers are discussing their viewpoints, analysts are betting on a rate hike by 25 basis points. The prospects of further rate hikes arouse questions.
Uncertainty about monetary policy triggered wild price swings in all types of assets in the last couple of weeks. Besides, the bond market went through the most volatile month since the banking crisis 15 years ago.
Today yields of two-year Treasuries stand at 4%, but intraday swings have been more than 25 basis points since March 10. Notably, on March 15, yields gyrated by more than 70 basis points.
The Federal Reserve is facing a tough challenge. Jerome Powell will have to comment on burning questions about financial stability, latest emergency lending, and the recent economic forecasts.
As for the corporate news, shares of First Republican Bank grew by 1.5% in the pre-market. PacWest and Western Alliance rose by 0.5% and 1.3%.
In the high-tech sector, Alphabet launched its chatbot Bard, awaiting feedback from its users. The company aims to outpace Microsoft in the superiority in artificial intelligence.
GameShop shares rallied by 47.0% after the company reported higher-than-expected profit for the fourth quarter due to lower spending and job cuts.
Nike shares slipped by 0.48% after the sports clothing manufacturer upgraded the revenue forecast for the whole year.
Other news in the corporate sector could prop up growth on Wall Street until the Fed’s meeting. Still, robust market moves will occur after Powell’s press conference.

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