Investing.com - Here’s a preview of the top 3 things that could rock markets tomorrow
1. Will the Federal Reserve Add a Fourth Rate Hike?
This and more will be answered on Wednesday at 2:00 p.m. ET, when the Federal Open Market Committee (FOMC) releases its decision on monetary policy, accompanied by its Summary of Economic projections on interest rates, inflation, unemployment and economic growth (GDP).
Investors expect the policymaking Federal Open Market Committee (FOMC) will raise rates by 0.25% to 1.50% to 1.75%.
The “dot plot,” – which shows where each FOMC member in the meeting thinks interest rates are heading at the end of the year for the next few years and in the longer run – is expected to garner the most investor attention.
In December, the Fed’s “dot plot” indicated the median forecast was a total of three rate hikes in 2018, however, recent hawkish language on inflation among Fed members including chairman Jerome Powell, raised the prospect of a fourth rate hike for 2018.
Goldman Sachs said Tuesday it expects four rate hikes in 2018 and a “more hawkish path for 2019,” that will raise investor expectations for a faster pace of rate hikes over the longer term.
Investors are also expected to carefully monitor comments from Federal Reserve chairman Jerome Powell press conference to judge whether the Fed chairman will continue to express optimism on the outlook for inflation and the economy despite a mixed batch of recent data.
Ahead of the FOMC decision on interest rates, the dollar trader higher against its rivals.
2. Rising U.S. Crude Oil Stockpiles to Derail Rally?
A fresh batch of inventory data from the Energy Information Administration (EIA) on Wednesday at 10.30 a.m. ET could derail bullish sentiment in crude prices as U.S. crude stockpiles to increase for the fourth-straight week.
Analysts forecast crude inventories rose by about 2.556 million barrels in the week ended March 16.
Crude oil futures settled at three weeks on Wednesday as the prospect of a disruption in Middle East crude supplies rose after Donald Trump hinting at pulling out from the Iran nuclear deal amid a visit from Saudi Crown Prince Mohammad Bin Salman.
3. Will Bond Yields Rise to Wreak Havoc on Equities?
A spike in bond yields was cited as one the catalysts that left equity markets nursing heavy losses in February as market participants said higher bond yields would go head-to-head with equities, competing for a larger chunk of investors’ portfolios.
“Rates do have room to run higher if stocks ignore an implied Fed warning about tightening speed in 2019,” FTN’s Jim Vogel warned on Tuesday.
While investor focus will likely be on the Federal Reserve, housing data – released well before the FOMC decision – will also attract attention after an unexpected slump in January.
Existing Home Sales for February is expected to show a rise of 0.5% to a seasonally adjusted annual rate of 5.41 million units, after falling 3.2% in January.
The nasdaq closed higher on Tuesday as a 2.7% rally in Amazon.com Inc (NASDAQ:AMZN) - to surpass Alphabet (NASDAQ:GOOGL) as the second most valuable company - offset ongoing losses in Facebook Inc (NASDAQ:FB).