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U.S. Stocks Showing A Lack Of Direction As Fed Announcement Looms

wallstreet2 19jun19 lt

With traders reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement this afternoon, stocks are showing a lack of direction in morning trading on Wednesday. The choppy trading comes on the heels of the rally seen in the previous session.

Currently, the major averages are on opposite sides of the unchanged line. While the Dow is up 41.47 points or 0.2 percent at 26,507.01, the Nasdaq is down 7.82 points or 0.1 percent at 7,946.06 and the S&P 500 is down 0.30 points or less than a tenth of a percent at 2,917.45.

The Fed is widely expected to leave interest rates unchanged, but traders will closely scrutinize the accompanying statement for clues about a potential rate cut in the near future.

Fed Chairman Jerome Powell's recent pledge to "act as appropriate" to sustain the U.S. economic expansion amid signs of a slowdown due to the U.S.-China trade war has led to speculation the Fed could cut rates as soon as July.

President Donald Trump has been urging the Fed to cut rates and added further pressure in remarks to reporters on Tuesday by suggesting he would consider demoting Powell if the central bank does not act.

"Well, let's see what he does," Trump said when asked if he still wants to demote Powell. "They're going to be making an announcement pretty soon, so we'll see what happens."

Trump cited European Central Bank President Mario Draghi's recent remarks hinting at additional stimulus, which the president has described as "unfair to the U.S."

"I can tell you that Draghi and the EU, if you look at what's going on with the euro, they have a much different stance than our folks do," Trump said.

Powell has denied that monetary policy decisions are impacted by politics, although some analysts accused the Fed of capitulating to Trump's demands by lowering its forecast for interest rates earlier this year.

The Fed is scheduled to announce its monetary policy decision at 2 pm ET, followed by Powell's press conference at 2:30 pm ET.

Most of the major sectors are showing only modest moves in morning trading, contributing to the lackluster performance by the broader markets.

Housing stocks are seeing considerable weakness, however, with the Philadelphia Housing Sector Index slumping by 1.3 percent. The index is pulling back after reaching a one-year intraday high in the previous session.

Chemical and natural gas stocks have also moved lower on the day, while some strength is visible among banking and biotechnology stocks.

In overseas trading, stock markets across the Asia-Pacific region moved sharply higher during trading on Wednesday. Japan's Nikkei 225 Index shot up by 1.7 percent, while Hong Kong's Hang Seng Index spiked by 2.6 percent.

Meanwhile, the major European markets have turned mixed on the day. While the French CAC 40 Index has inched up by 0.1 percent, the German DAX Index is down by 0.1 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.

In the bond market, treasuries have moved to the downside ahead of the Fed announcement. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.4 basis points at 2.094 percent.

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