Dow up ahead of Fed meeting

By | 03/20/2019

  • Jerome Powell appears likely to argue against new rate hike
  • US inflation remains low
  • Dow Jones Industrial Average up almost half a percent

Stocks rose on Tuesday as investors looked to the start of the two-day Federal Reserve meeting. Fed Chairman Jerome Powell appears likely to argue against a new interest rate hike and instead opt to make no changes to the central bank’s current strategy after four increases last year

CMC Markets UK Market Analyst David Madden commented: “Some traders are expecting the Federal Reserve to not only keep rates on hold, they will issue a neutral outlook.” 

“The US central bank has rowed back on the previous hawkish commentary and have now adopted a more middle-of-the-road stance, and that is likely to boost investment sentiment,” he added.

The US is still the world’s biggest economy, and with inflationary pressures low, there is no urgency for the Fed to change tack and introduce another rate rise. The current situation is quite different from that of six months ago, when many onlookers expected the hikes to continue into this year

In the run-up to the latest Fed meeting, the Dow Jones Industrial Average saw a rise of 0.48% to 26,038. The S&P 500 gained 0.41%, and the Nasdaq increased by 0.39%.

Some stocks were troubled as Boeing continued to battle the fallout from the recent fatal crash of one of its new 737 MAX planes. Air Canada is the latest company to move against the aircraft, suspending new deliveries.

Air Canada Chief Commercial Officer Lucie Guillemette explained that her company was revising its schedule until July and has subsequently taken steps to continue delivering “substantially all” of the planned capacity through their global network.

Boeing shares have dropped by 16% this month. 

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