© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 3, 2022. REUTERS/Brendan McDermid
By Devik Jain
(Reuters) – The and the Nasdaq slipped on Wednesday as growth stocks lost ground, while banks gained ahead of a Federal Reserve policy decision expected to result in the biggest interest rate hike since 2000.
Six of the 11 major S&P sectors advanced in early trading, led by energy stocks. Oil prices jumped nearly 4% as the European Union spelled out plans to phase out imports of Russian oil. [O/R]
Rate-sensitive banking stocks rose 0.8%, while megacap stocks such as Amazon.com Inc (NASDAQ:), Tesla (NASDAQ:) and Nvidia (NASDAQ:) fell, weighing on the Nasdaq.
Traders are pricing in expectations of a 50 basis points (bps) rate hike and the start of reductions to the U.S. central bank’s $9 trillion balance sheet when the Fed releases its statement at 2 p.m. ET (1800 GMT).
The spotlight will be on Fed Chair Jerome Powell’s news conference for fresh clues on how far and how fast the central bank is prepared to go in an effort to bring down decades-high inflation.
“The (50 bps hike) is baked into the market. What maybe isn’t is what’s the eventual end point here,” said Josh Wein, portfolio manager at Hennessy Funds.
“The market is still adjusting to this inflation story and the need for the Fed to be proactive … it’s easy to lose sight of the fact that companies are in very good shape in aggregate and several rate hikes…
