US equities rise ahead of Federal Reserve's key decision

Company News

by Glenn Dyer

US equity indexes closed higher on Friday as markets looked ahead to the Federal Reserve's latest monetary policy decision, due this week. The Dow and the Nasdaq both rose 0.7%, reaching 41,393.8 and 17,684, respectively, while the S&P 500 gained 0.5%, closing at 5,626.

For the week, the Nasdaq jumped nearly 6%, the S&P 500 advanced 4%, and the Dow was up 2.6%.

The Federal Open Market Committee's (FOMC) two-day meeting is scheduled to begin on Tuesday.

Investors currently see a 55% probability that the FOMC will lower its benchmark lending rate by 0.25% on Wednesday, with the remaining odds favouring a more aggressive 50-basis-point reduction.

Brokers at Jefferies expect policymakers to reduce rates by 25 basis points.

"We expect the language in the policy statement to change significantly, reflecting a shift in the balance of risks to the downside for the labour market and towards greater confidence in achieving the FOMC's 2% inflation goal over time," the brokerage said in a Friday note to clients.

"This will set the stage for additional rate cuts at upcoming meetings."

The US two-year yield fell 5.9 basis points to 3.59%, while the 10-year rate dropped 2.1 basis points to 3.66%.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

Subscribe to our Daily Newsletter?

Would you like to receive our daily news to your inbox?