U.S. Stocks Holding On To Moderate Gains Ahead Of Fed Decision

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Stocks moved to the upside early in the session on Wednesday and continue to see some strength in afternoon trading. With the upward move on the day, the major averages are partly offsetting the steep losses posted in the previous session.

Currently, the major averages are off their best levels of the day but remain in positive territory. The Dow is up 99.83 points or 0.3 percent at 30,806.04, the Nasdaq is up 48.24 points or 0.4 percent at 11,473.29 and the S&P 500 is up 19.61 points or 0.5 percent at 3,875.54.

The rebound on Wall Street partly reflects bargain hunting, as traders pick up stocks at reduced levels after yesterday's weakness dragged the major averages down to two-month closing lows.

Buying interest remains somewhat subdued, however, as traders look ahead to the Federal Reserve's monetary policy decision this afternoon.

With the announcement looming, CME Group's FedWatch Tool is currently indicating an 84.0 percent chance of a 75 basis points rate hike and a 16.0 percent chance of a 100 basis point rate hike.

The size of the rate increase is likely to be in the spotlight, although traders are also likely to pay close attention to the accompanying statement for clues about the outlook for future rate hikes.

In U.S. economic news, the National Association of Realtors released a report showing existing home sales edged down by much less than expected in the month of August.

NAR said existing home sales declined for the seventh consecutive month but dipped by a relatively modest 0.4 percent to an annual rate of 4.80 million in August after plummeting by 5.7 percent to a revised rate of 4.82 million in July.

Economists had expected existing home sales to tumble by 2.3 percent to an annual rate of 4.70 million from the 4.81 million originally reported for the previous month.

Despite falling by much less than expected, existing home sales still dropped to their lowest level since spring of 2020.

Sector News

Housing stocks continue to turn in a strong performance in afternoon trading, with the Philadelphia Housing Sector Index climbing by 1.4 percent.

Significant strength also remains visible among semiconductor stocks, as reflected by the 1.4 percent gain being posted by the Philadelphia Semiconductor Index. The index is bouncing off its lowest closing level in well over two months.

Networking stocks have also shown a notable move to the upside on the day, driving the NYSE Arca Networking Index up by 1.1 percent.

Tobacco, brokerage and utilities stocks are also seeing some strength, while airline stocks have climbed off their worst levels but continue to see considerable weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.4 percent, while Hong Kong's Hang Seng Index plunged by 1.8 percent.

Meanwhile, the major European markets moved to the upside on the day. While the French CAC 40 Index advanced by 0.9 percent, the German DAX Index climbed by 0.8 percent and the U.K.'s FTSE 100 Index rose by 0.6 percent.

In the bond market, treasuries have pulled back near the unchanged line after seeing early strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 3.577 percent.

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