The S&P 500 (SPX) opened lower on Wednesday ahead of the Fed rate decision at 2 p.m. Eastern Time today.
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Trade QQQ with leverageThe central bank is expected to keep rates on hold, with the CME FedWatch tool pricing in a 99% chance of this scenario. In addition, the odds of rate cuts by year-end slipped lower following an inflation update from the Bureau of Labor Statistics (BLS).
Rising PPI and Oil Prices Cloud Fed Rate Outlook
The U.S. Producer Price Index (PPI) increased by 0.7% month-over-month in February, above the estimate of 0.3% and accelerating from 0.5% in January. Over half of the gain was attributed to a 0.5% increase in services costs.
In addition, the data has yet to factor in higher oil and gas prices from the U.S.-Iran war and the closure of the Strait of Hormuz, complicating the Fed’s rate path outlook even further. By year-end, the most likely outcome at 40.1% is for zero rate cuts. The odds of one rate cut follow closely behind at 40%.