Investors Brace For Fed Decision As US Stocks Remain Near Flat

There were few surprises on Wall Street on Wednesday morning, but investors may have been waiting for some time to see what the Fed will decide in its latest monetary policy meeting because fears of a financial crisis are easing after three regional lenders recently closed their doors.

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In that regard, traders and analysts are largely expecting the US central bank to raise interest rates by 25 basis points from what it has already done this year as a means of controlling inflation, while at the same time avoiding a larger increase in order to prevent further disruptions in the banking sector.

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At 3,601.83, the Dow Jones Industrial Average rose around 0.1 percent, while the broad-based S&P 500 index slumped to 4,001.83, although both indexes were up around 0.1 percent.

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Nasdaq Composite Index, which is largely populated by tech companies, fell 0.1 percent to 11,853.44.

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There is much optimism among investors and the financial markets after major financial authorities took steps this week to try to shore up the banking sector after Silicon Valley Bank and Signature Bank collapsed within a short period of time.

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A conference Tuesday at the U.S. Department of Treasury was attended by Treasury Secretary Janet Yellen, who suggested that the current situation is stabilizing, but that the country is prepared to step in and assist smaller institutions if they suffer deposit runs that have the potential to spread.

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In a note prepared before the start of trading, Patrick O'Hare of Briefing.com told MarketWatch that there isn't much evidence that the stock market is afraid of the Fed so far this week.

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He said that "ironically, rising market rates are viewed by many as a comforting factor in the current situation, although previously, they were considered a scare factor regarding the banking crisis when the rates were screamed lower.".

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I think it is likely that Fed Chair Jerome Powell will acknowledge banking risks in a note, but argues that the threat can be contained in the interim. Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote the note.