Wall Street to see muted start ahead of Fed minutes

The main indices on Wall Street are expected to open fairly flat on Wednesday as investors await the minutes from the last Federal Reserve meeting on March 17. The statement from the Fed’s open market committee at the time included a revised growth forecast but suggested no interest rate rises until 2023.

Sophie Griffiths, market analyst at OANDA, said: “Looking ahead to the US open, futures are pointing to a muted open ahead of the minutes from the latest FOMC meeting… Whilst US treasury yields are trending lower today, any sense of a more hawkish Fed could reignite the bond market rout which dominated in the first three months of the year.”

Neil Wilson at Markets.com said: “The minutes could help explain how the Fed plans to communicate future policy decisions and shed light on how some policymakers could change their view on monetary policy if inflation and growth does accelerate as expected this summer.

“Whilst [Fed chair] Jay Powell has kept market speculation at bay, the minutes could allow participants to focus on when the Fed will tighten. As detailed after the meeting statement, it looks as though the Fed is happy to let the economy run hot and won’t intervene to cool it down. Even with growth in excess of 6.5% this year, 3% in 2022 and 2% in 2023; it still sees no need to tighten policy within the next almost three years…

“It also doesn’t really think the sharp bounce back this year is sustainable, meaning now is not the time to remove the punchbowl. US 10-year yields have retreated to under 1.64% – given the pullback from the recent highs there is a risk the market sees something in the minutes which signals it could tighten policy sooner than it is currently guiding.”

The Dow Jones Industrial Average is forecast to open up around 17 points or 0.04% while the S&P 500 is expected to edge up 0.02% and the Nasdaq Composite make a flat start.

Four things to watch for on Wednesday:

• Companies in the earnings diary for mid-week include coating and sealants maker RPM International Inc (NYSE:RPM), frozen french fries maker Lamb Weston Holdings Inc (NYSE:LW) and steelmaker Schnitzer Steel Industries Inc (NASDAQ:SCHN)
• Shares in Amazon Inc (NASDAQ:AMZN) may draw some attention after its founder and world’s richest man Jeff Bezos backed an increase in corporate tax rates
• Meanwhile, Tesla Inc (NASDAQ:TSLA), run by world’s second richest man Elon Musk, could also be in focus after it emerged that Musk’s brother Kimbal pocketed more than US$7mln from stock trades in the electric car maker using options
• On the macro front, aside from the Fed minutes, investors will be keeping an eye on US trade balance data

Story by ProactiveInvestors