FX.co ★ Nasdaq, S&P 500 Move To The Downside Ahead Of Fed Announcement

On Wednesday, the stock market exhibited a downward trend, surrendering gains from the previous day's significant recovery. While the Nasdaq and S&P 500 indices declined, the narrower Dow Jones Industrial Average managed to record a slight increase.

Presently, the Nasdaq has dropped 123.84 points or 0.6% to sit at 19,609.74, and the S&P 500 has decreased by 19.19 points or 0.3% to 6,048.51. Conversely, the Dow has risen by 32.61 points or 0.1% to reach 44,882.96.

Market participants are expressing concerns about future interest rates as they await the Federal Reserve's monetary policy announcement scheduled for this afternoon.

While it is widely anticipated that the Fed will maintain current interest rates, investors will closely scrutinize the accompanying statement and Fed Chair Jerome Powell's post-meeting press conference for further insights.

Recent economic indicators have fueled apprehensions that the Fed might hold rates steady for an extended period. Nevertheless, a majority of economists predict the central bank may resume rate cuts within the first half of the year.

According to the CME Group's FedWatch Tool, there is currently a 73.8% probability of a rate reduction by at least a quarter point following the Fed's June meeting.

Wall Street's weakened performance is also attributed to anticipation of earnings reports from major corporations including Microsoft (MSFT), IBM (IBM), Meta Platforms (META), and Tesla (TSLA), expected after today’s trading session concludes.

Nvidia (NVDA) shares have also contributed to the market pressure, with the prominent AI company experiencing a decline of 4.9% after an impressive 8.8% surge on Tuesday.

**Sector Overview**

Software stocks are retracting after a strong previous session, resulting in a 1.4% decrease in the Dow Jones U.S. Software Index. The index had closed Tuesday at its highest level in more than a month.

Housing stocks are also exhibiting notable weakness, highlighted by a 1.1% drop in the Philadelphia Housing Sector Index.

Conversely, airline stocks are demonstrating significant growth, pushing the NYSE Arca Airline Index up by 1.3%.

Additionally, sectors such as steel, computer hardware, and banking are showing strength, helping to mitigate broader market declines.

**Global Markets**

Internationally, Asia-Pacific markets generally advanced on Wednesday, with some markets closed for holidays. In particular, Japan's Nikkei 225 Index increased by 1.0%, and Australia's S&P/ASX 200 Index rose by 0.6%.

In European trading, markets displayed mixed results. While the French CAC 40 Index fell by 0.3%, the U.K.'s FTSE 100 Index increased by 0.5%, and Germany's DAX Index rose by 1.1%.

In the U.S. bond market, treasuries are experiencing modest gains ahead of the Fed's policy announcement, resulting in a decline of 1.5 basis points in the yield on the benchmark ten-year note, bringing it to 4.534%.