US Federal Reserve Meeting: S&P 500, Nasdaq Open Higher Ahead Of Anticipated Interest Rate Cut Announcement

The Wall Street opened higher on Wednesday as anticipation grew over the US Federal Reserve's first rate cut since the onset of Covid-19 pandemic four years ago.

The broader index, S&P 500, opened 0.13% higher at 5,641.68, whereas the tech-heavy Nasdaq Composite opened 0.2% higher at 17,663.383.

The 30-stock Dow Jones Industrial Average was up 0.05%, opening at 41,628.91.

Seven out of 11 S&P 500 sectors were in the green, whereas four sectors — financials, consumer discretionary, information technology and real estate — were in the red.

Among the mega-caps, Apple was trading 2% higher at $221.1 apiece on the Nasdaq around an hour after the opening bell. However, Microsoft was down 0.65% at $432.3.

The American depository receipts of two key Indian IT players, Infosys Ltd. and Wipro Ltd., declined 2.09% and 1.92%, respectively.

The US Treasury yield rose three basis points to 3.68%. The dollar also climbed, trading 0.17% higher at $1.11 against the Euro, and 0.56% higher at $1.32 against the British Pound.

In the cryptocurrency market, Bitcoin dropped 0.4% to trade at $59,921.75.

Ahead of the US stock market's opening, the futures of S&P 500 and Dow Jones were trading nearly flat.

Crude oil prices edged lower in the run-up to the Fed decision, with Brent futures for November delivery trading 0.42% lower at $73.4 per barrel. The West Texas Intermediate futures were down by 0.3%, edging below $70 per barrel.

Gold, the safe-haven asset whose demand generally rises with an ease in the monetary policy, was edging higher as the US stock markets opened. Spot gold was trading 0.3% higher at $2,576.95 per ounce. The US gold futures also climbed 0.3% to $2,602.3 an ounce.

While speculations are rife that the Fed will initiate the much-awaited rate cut cycle, there remains uncertainty over the size of the reduction. If the benchmark lending rate is eased by 25 basis points, there could be some profit booking, analysts said.

The market's expectation of a 50 basis points cut stands at 63%, according to CME Group’s FedWatch tool.

To follow the live updates on Fed rate cut action, stay tuned here.

“If they’re doing 25 basis points this time, the likelihood that they can get to a hundred basis points by year end is pretty slim,” Justin Onuekwusi, chief investment officer at St James Place Management, told Bloomberg.

Apollo Global Management Chief Economist Torsten Slok said the focus of markets will also remain on the Fed's commentary and the press conference to be addressed by its Chair, Jerome Powell.

The Fed's dot plot will be critical in determining the path ahead, he explained. If the dot plots suggest six or seven rate cuts instead of 10 cuts, then the "markets will look at that and say, ‘maybe we are overpricing this',” Slok told the news agency.

Meanwhile, the Indian markets edged lower on Wednesday, ahead of the Fed decision. The NSE Nifty 50 ended 41 points or 0.16% lower at 25,377.55, and the S&P BSE Sensex ended 131.43 points or 0.16% lower at 82,948.23.

Japan's Nikkei 225 closed 0.49% or 176.95 points, higher at 36,380.17. China's Shanghai Stock Exchange also settled 0.49% higher at 2,717.28, whereas Hong Kong's Hang Seng Index closed 1.37% higher at 17,660.02.