Wall Street stocks mixed as the USD steals the show

Wednesday will see the Fed’s Monetary Policy Statement at 18:00 GMT which can potentially send the USD higher.
The US stocks are adjusting to the idea of higher interest rates.

Flavio Tosti Independent Analyst

The S&P 500 Index added 6.75 points or 0.25% to 2,658.80 while the Dow Jones Industrial Average lost 0.27% to 24,099.05 and the tech-heavy Nasdaq Composite Index added 64.44 points ending the day at 7,130.70 gaining 0.91% in Tuesday’s trading.

Although earnings are stellar the stock market indices are not breaking out strongly. The bear argument is that the gains of the tax cut came in the fourth quarter of 2017, the global growth is seen slower and higher interest rates coupled with slower growth can lead to stagflation. Additionally, the rising US Treasury yields and surging US dollar are also not helping stocks gaining traction.

On the macroeconomic front, the Federal Reserve Bank started a two-day monetary policy meeting known as FOMC which will lead on Wednesday to the Fed’s Monetary Policy Statement’ s report. The Fed is not expected to raise rates on Wednesday, however, expectations are high that the Fed will announce a rate in June.

"The bad news is that inflationary pressures are building. The good news is that Fed officials must be doing a victory dance. That's because they've been trying to boost the inflation rate closer to their 2.0% target ever since they publicly announced it at the start of 2012. Now that their mission seems to have been accomplished, Fed officials are likely to stay on their announced course of gradually tightening monetary policy," said Ed Yardeni, president at Yardeni Research.

S&P 500 daily chart

Author

Flavio Tosti

Independent Analyst

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