Stocks moved higher on Wall Street in afternoon trading in New York as investors await Wednesday’s decision by the Federal Reserve on interest rates.
The S&P 500 was up 0.1 per cent in late trade, the Dow Jones Industrial Average is up 0.4 per cent and the Nasdaq has added 0.4 per cent. The indexes briefly dipped into the red earlier in the day, reflecting choppy trading. The Australian sharemarket is poised to open higher, with futures pointing to a gain of 47 points, or 0.7 per cent, at the open. Australia’s RBA raised rates on Tuesday for the first time since 2010.
Energy stocks made solid gains following encouraging earnings reports from several oil and gas companies. BP jumped 8.3 per cent after reporting its highest quarterly profit in more than a decade thanks to surging oil and gas prices. Devon Energy rose 9.4 per cent and Diamondback Energy gained 7.1 per cent after they reported strong financial results.
Technology stocks held on to slight gains after a mixed morning. Many companies in the sector have pricey stock values and therefore have more force in pushing the major indexes up or down. Apple rose 0.6 per cent.
The moderate gains follow a late-day rally on Monday that gave indexes a positive start to May after a brutal April.
“The rally in stocks yesterday and today is just positioning and squaring ahead of the Fed’s meeting tomorrow,” said Zach Hill, head of portfolio management at Horizon Investments.
Wall Street’s key focus over the next several days is the Fed. The central bank is meeting on Tuesday and will release a statement on Wednesday. Investors expect it to raise its benchmark rate by twice the usual amount this week as it steps up its fight against inflation, which is at a four-decade high. It has already raised its key overnight rate once, the first such increase since 2018, and Wall Street is expecting several big increases over the coming months.
The Fed’s aggressive shift to raise interest rates comes as rising inflation puts more pressure on businesses and consumers. Higher costs for energy and other commodities have prompted many businesses to raise prices and issue cautious forecasts to their investors. Wall Street and economists are worried that higher prices on everything from food to petrol and clothing will prompt a slowdown in consumer spending and crimp economic growth.