The Federal Reserve will release minutes Wednesday from its latest policy meeting, potentially giving investors more insight into its decision-making process. Wall Street has been hoping that the central bank might ease up on its aggressive rate increases. Its benchmark rate currently stands at 3.75% to 4%, up from close to zero in March.
“Ahead of the release of Fed minutes, much focus has been placed on a slowing down on the pace of rate hikes,” Mizuho Bank said in a commentary. “Nonetheless, even if a Fed rate hike step down might be imminent, the picture on risk/growth outlook is far from certain.”
Investors have very little other news to review this week, but several retailers and technology companies are closing out the latest round of corporate earnings with their financial results.
Dell Technologies rose 6.8% after the computer maker reported strong third-quarter profit and revenue. Zoom Video slumped 3.9% after giving investors a weak profit and revenue forecast.
Several retailers made particularly strong gains following solid financial results. Abercrombie & Fitch surged 21.4% and American Eagle jumped 18.2%.
The Fed has warned that it may have to ultimately raise rates to previously unanticipated levels to cool the hottest inflation in decades. That raises the risk it could go too far in slowing economic growth and bring on a recession.
The Paris-based Organization for Economic Cooperation and Development is forecasting modest economic growth globally this year and more tepid growth in 2023. Russia’s war in Ukraine continues threatening energy supplies and key food commodities including wheat. A resurgence of COVID-19 cases in China continues threatening the world’s second-largest economy and global supply chains.
“In 2023, we expect less pain but also no gain,” stated a report from Goldman Sachs looking ahead to the new year.
The investment bank expects inflation and high interest rates to essentially flatten out corporate earnings and hold the broader stock market at its current levels, with the S&P 500 ending 2023 where it currently sits at around 4,000 points.