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Federal Reserve Decision in Focus on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a mixed opening on Wednesday as traders look ahead to the Federal Reserve?s monetary policy announcement.

Traders may be reluctant to make any significant moves ahead of the Fed?s announcement of its latest monetary policy decision, which is due at 2 pm ET.

The Fed is widely expected to leave interest rates unchanged, but the accompany statement could provide clues about the outlook for rates.

At its June meeting, the Fed raised interest rates by 25 basis points to a range of 1.75 percent to 2 percent and forecast two additional rate hikes this year.

Traders are also digesting the latest news regarding the escalating trade dispute between the U.S. and China, the world?s two largest economies.

Reports said President Donald Trump?s administration is considering raising the proposed tariff on $200 billion worth of Chinese imports to 25 percent from the 10 percent announced last month.

A spokesman for China?s Foreign Ministry responded by accusing the U.S. of ?blackmail? and warning of inevitable countermeasures if the U.S. takes further escalatory steps.

Stocks showed a strong move to the upside in morning trading on Tuesday and managed to hold on to most of their gains throughout the afternoon. The upward move on the day came on the heels of the notable weakness seen in the previous session.

The major averages pulled back off their best levels of the day but still closed firmly in positive territory. The Dow rose 108.36 points or 0.4 percent to 25,415.19, the Nasdaq advanced 41.78 points or 0.6 percent to 7,671.79 and the S&P 500 climbed 13.69 points or 0.5 percent to 2,816.29.

The strength on Wall Street came following a report from Bloomberg indicating the U.S. and China are trying to restart talks aimed at averting a full-blown trade war.

Citing two people familiar with the effort, Bloomberg said representatives for U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are having private conversations.

The two people cautioned that a specific timetable, the issues to be discussed and the format for talks aren’t finalized, Bloomberg said.

Traders were also digesting the latest batch of U.S. economic data, including a report from the Commerce Department showing personal income and spending both increased in line with economist estimates in the month of June.

The report said personal income climbed by 0.4 percent in June, matching the increase seen in May as well as expectations.

The Commerce Department said personal spending also rose by 0.4 percent in June after climbing by an upwardly revised 0.5 percent in May.

Economists had expected spending to increase by 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month.

A separate report from the Conference Board showed a modest rebound in consumer confidence in the month of July.

The Conference Board said its consumer confidence index inched up to 127.4 in July from an upwardly revised 127.1 in June. Economists had expected the index to rise to 127.0 from the 126.4 originally reported for the previous month.

Telecom stocks saw considerable strength on the day, resulting in a 1.6 percent advance by the NYSE Arca Telecom Index. With the gain, the index reached its best closing level in well over four months.

Significant strength was also visible among transportation stocks, as reflected by the 1.3 percent gain posted by the Dow Jones Transportation Average.

Matson (MATX), FedEx (FDX), and Landstar Systems (LSTR) turned in some of the transportation sector’s best performances.

Tobacco, real estate, and biotechnology stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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