Wall Street awaits Fed interest rate decision

The markets are waiting anxiously for the central bank's decision, traders are holding back in advance. On the other hand, there are signs of a slight easing in bond yields.

Dusseldorf. Shortly before the US Federal Reserve's interest rate decision at 8 p.m. German time, there was little movement on Wall Street. The major indices are gaining slightly, but trading is subdued ahead of the expected rate hike by the Federal Reserve (Fed).

The US standard value index Dow Jones is almost unchanged at 52,195 points.

The broader S&P 500 gained around 0.4 percent and was trading at 7,609 points.

The technology-heavy Nasdaq Composite gained 0.4 percent to 26,088 points.

The Nasdaq 100, a reflection of the 100 non-financial companies with the highest market capitalization, is up around 0.4 percent at 29,385 points.

The US Federal Reserve's interest rate decision is particularly important this time. Shortly before the decision, market observers almost unanimously assumed that the Federal Reserve would raise key interest rates. At the CME futures exchange, 92.5 percent expect an interest rate step, and around 90 percent on the Polymarket crypto betting platform.

The main reason is the stubbornly high inflation: In August it remained at 3.4 percent for the year, as the responsible statistics office announced last week. Core inflation, which is particularly relevant for the Fed, also remains at an elevated level. It was 2.4 percent.

The Fed has a dual mandate and strives for full employment in addition to stable prices. The labor market was robust in August, with more jobs created than expected. This development also points to an interest rate increase.

US President Trump, however, called for an interest rate cut after the publication of the labor market report for August last week. “Lower interest rates or I’ll stop trading with countries we have a deficit with,” Trump wrote on his Truth Social platform. “High interest rates put the USA at a very unfair disadvantage, I won’t allow that!”

Yields on US government bonds are falling slightly

Meanwhile, signals of relaxation are coming from the bond markets. The ten-year US government bonds, on which countless other financial market transactions worldwide are based, are producing slightly lower returns for the first time after reaching new 19-year highs on Tuesday. They fell below the 5.0 percent mark on Wednesday and are currently around 4.97 percent. Similar movements can also be seen in US two-year and 30-year bonds.

A fundamental reason for this could not initially be identified. Oil and gas prices remain at high levels and there are no signs of easing the conflict situation around the Persian Gulf.

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JB Hunt: After a profit warning, the freight company's shares lost more than ten percent in value. High diesel prices are putting a strain on the company, which maintains a large fleet of trucks.