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US open: Mixed start to trading ahead of Fed update

By Iain Gilbert

Date: Wednesday 11 Dec 2019

US open: Mixed start to trading ahead of Fed update

(Sharecast News) - Wall Street trading got off to a somewhat mixed start on Wednesday as market participants awaited the latest policy announcement from America's central bank.
As of 1525 GMT, the Dow Jones was flat on 27,881.16, while the S&P 500 was up 0.28% at 3,141.26 and the Nasdaq Composite started out the session 0.31% firmer at 8,643.26.

The Dow opened 0.56 points lower on Wednesday after stocks finished below the waterline following a choppy session, on Tuesday, that saw investors remain glued to their screens for any hint of fresh developments in the ongoing US-China trade war.

Investors looked set to remain cautious on Wednesday amid uncertainty on the trade front and ahead of the central bank's rate decision, which was due at 1900 GMT.

Analysts at TD Securities said: "We look for the Fed to keep rates steady at 1.50-1.75%, officially bringing an end to the 75 basis points mid-cycle adjustment.

"The FOMC is likely to communicate patience in deciding future policy moves and to reiterate that a 'material reassessment' in the outlook is a precondition to ease further."

However, TD added: "A dovish surprise should elicit a stronger reaction than a hawkish surprise."

Fed Chairman Jerome Powell will address the press at 1930 GMT.

Elsewhere, there continued to be no clear indication as to whether or not Washington and Beijing will reach an agreement over trade that could stop or reduce the current level of tariffs. The White House was set to slap fresh duties on another $156bn-worth of Chinese goods on Sunday.

On the data front, refinance volumes pushed total mortgage application activity 3.8% higher week-on-week, according to the Mortgage Bankers Association's seasonally adjusted index.

Volumes were 63% higher than in the same week one year ago, while applications to refinance a home loan jumped 9% for the week and were 146% higher year-on-year.

Elsewhere, higher energy prices saw the cost of living in the US accelerate last month to a one-year high.

According to the Department of Labor, the year-on-year rate of increase for headline consumer prices picked up from 2.0% in October to 2.1% for November (consensus: 2.0%). Headline CPI increased by 0.3% month-on-month -led by a 0.8% jump in energy prices.

In the corporate space, Home Depot shares were down 1.72% at the bell after forecasting 2020 sales growth below expectations, while Boeing shares flew lower after Federal Aviation Administration boss Steve Dickson said the re-certification process for the embattled 737 Max would stretch into the new year.

Both American Eagle Outfitters and Lululemon Athletica were scheduled to post earnings on Wednesday.


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