Stocks fell in morning trading on Wall Street Wednesday, ahead of what traders expect will be another big interest rate increase from the Federal Reserve. Markets will be watching closely to see what Fed Chair Jerome Powell says about the central bank’s outlook for how long rates will need to stay high to fight inflation.
The S&P 500 fell 0.5% as of 10:07 a.m. Eastern. The Dow Jones Industrial Average fell 104 points, or 0.3%, to 32,546 and the Nasdaq fell 0.4%. Small company stocks lost more ground than the broader market. The Russell 2000 fell 1.1%.
The Fed is due to wrap up a two-day policy meeting later Wednesday that’s expected to produce the sixth interest rate increase of the year. The widespread expectation is for the Fed to push through another increase that’s triple the usual size, or three-quarters of a percentage point.
Investors will be listening closely to Powell’s comments as they try to determine what the central bank’s next move will be at its final meeting of the year in December. Opinions are currently split among investors as to whether the Fed will make another three-quarters point move or dial back to a half-point increase.
The path ahead for the Fed is closely tied to whether inflation cools from its hottest levels in four decades. Wall Street is concerned about inflation squeezing consumers and businesses while worries grow that the Fed could bring on a recession by slowing the economy too much.
Wall Street has been closely watching the latest economic data, which is heavy on the employment market this week. It has remained strong despite inflation, which is being taken as a sign that the Fed will have to remain aggressive in its fight against high prices.
