U.S. stocks close higher as investors await Federal Reserve’s monetary policy meeting

77

7th June 2023 – (New York) U.S. stocks closed higher on Tuesday, with the Dow Jones Industrial Average rising by 10.42 points, or 0.03 percent, to 33,573.28, the S&P 500 adding 10.06 points, or 0.24 percent, to 4,283.85, and the Nasdaq Composite Index increasing by 46.99 points, or 0.36 percent, to 13,276.42.

Financials and consumer discretionary were the leading gainers, rising 1.33 percent and 0.99 percent, respectively, while health and consumer staples led the laggards by losing 0.88 percent and 0.47 percent, respectively.

Investors remain optimistic about the future of the stock market, with a rotation into the financial sector, bolstering the hope that the breadth of the benchmarks’ rally might extend beyond technology. However, some investors are questioning whether markets have run up too fast on the hype for artificial intelligence (AI).

Morgan Stanley’s chief U.S. equity strategist, Mike Wilson, noted that while there will undoubtedly be individual stocks that deliver accelerating growth from spending on AI this year, “we do not think it will be enough to change the trajectory of the overall cyclical earnings trend in a meaningful way.” Wilson added that investing in AI may pressure margins further, as companies decide to invest in AI despite decelerating growth in the near term.

As investors wait for the Federal Reserve‘s next move, U.S. stocks drifted mostly on Tuesday, lacking immediate data to push markets sharply. The central bank is scheduled to meet next week to determine whether to pause or keep increasing interest rates.

“After a valiant attempt at entering a bull market, stocks are wavering as Wall Street contemplates how much more tightening will we see by the Fed,” said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.

According to data from the CME FedWatch Tool on Tuesday afternoon, the Federal Open Market Committee has around an 80 percent probability of pausing rate hikes in the upcoming monetary policy meeting.