S&P, Dow slip ahead of Fed decision on monetary policy

American stocks slipped Wednesday, May 2, 2018, as investors looked ahead to the Federal Reserve’s latest announcement on monetary policy.

The Dow Jones industrial average fell 45 points, as a 1.3 percent decline in Intel offset a 3 percent jump in Apple. The S&P 500 slipped 0.2 percent as health care fell nearly 1 percent. The Nasdaq composite fell 0.1 percent after opening slightly higher.

The Fed is scheduled to release its latest monetary policy decision at 2 p.m. ET (about 8 pm Nigerian time) but market expectations for a May rate hike are just 5.7 percent, according to the CME Group’s FedWatch tool.

While market participants do not foresee any modifications to interest rates, investors will be looking for clues about the Fed’s tightening pace moving forward.

“While the debate over how many more times the Fed will increase rates through 2018 rages on, we’re unlikely to get all that much clarity from Wednesday’s press release,” Nicholas Colas, co-founder of DataTrek Research, is reported to have said.

“What matters more to markets is this question: ‘Where will Fed Funds be at the end of 2019?'”

Treasury yields were little changed ahead of the announcement, with the 10-year note yield trading at 2.974 percent and the two-year yield below a near 10-year high.

In corporate news, Apple rose after reporting better-than-expected quarterly earnings and revenue that surpassed market expectations.

Wall Street was eagerly waiting for Apple’s quarterly figures as the company is seen as a bellwether for the technology sector.

Earnings season continued Wednesday with CVS Health and Estee Lauder among the companies that reported earnings that beat analyst expectations. Garmin and Clorox also posted stronger-than-forecast results.

Overall, most major companies have reported quarterly earnings that outperform analyst estimates. According to FactSet, 79.1 percent of S&P 500 companies that have reported thus far have surpassed earnings expectations.

In economic news, mortgage applications dropped 2.5 percent as rates reached their highest levels in nearly five years. ADP and Moody’s Analytics also found that private payrolls grew by 204,000 in April, more than the expected 200,000.

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