Dow Jones, Wall Street in cautious mode ahead of Fed decision, oil remains elevated

Benchmark indices on Wall Street ended above the flat line on Tuesday, March 17, but significantly off the highs of the session as markets shifted to a wait-and-watch mode ahead of the US Federal Reserve’s interest rate decision later tonight.

The Dow Jones ended 0.2% higher, although it cooled off by over 400 points from the session’s highs. The S&P 500 and Nasdaq also came off the highs, ending 0.2% and 0.5% higher respectively. Bond yields and the US Dollar fell in tandem ahead of the Fed decision.

Oil prices continued to remain at elevated levels, with Brent sustaining above the mark of $100 a barrel for the fourth day running, while the US Crude variant continues to hover around or above the mark of $95.
Despite the uncertainties, US stocks are flashing their strongest buy signal in nearly a year, according to Alex Altmann of Barclays. He cited the Barclays Equity Timing Indicator or BETI, which dropped to the lowest level since the Liberation day tariff issues. It reached a threshold that has historically marked “highly attractive” entry points.

All eyes are now on the Fed’s decision tonight, with officials widely expected to maintain a status quo. Focus will be on Fed Chair Jerome Powell’s commentary, as the central bank grapples with poor economic data, as well as higher oil prices, that will impact future inflation and economic data prints.

“Risk assets like US stocks and cryptocurrencies have held up surprisingly well despite all the turmoil,” said Bret Kenwell at eToro. “Depending on whether the Fed strikes a more dovish or hawkish tone, that could shape the near-term direction for both into quarter-end.”

(With Inputs From Agencies)