U.S. stocks opened lower Wednesday in choppy trading as traders eyed the difficult choice facing the Federal Reserve of whether to prioritize fighting inflation or banking sector stability.
Futures markets are pricing in an 89% probability of a 25 basis point hike in the fed funds rate to a range of 4.75% to 5%. The Fed will be looking to gather information from the market reaction, especially on the inflation expectations front, as Powell speaks at the press conference, said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.
Investors have welcomed easing tensions in the financial sector while hoping the subsequently tighter credit conditions will help slow the economy and thereby bring forward the time when the Fed can start cutting borrowing costs again.