Stocks Rise as Fed Rate Decision Looms: What Investors Need to Know

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Hello readers,

Stocks rose again on Tuesday, with investors putting aside their worries about Wednesday’s Fed rate decision for another day. The Dow Jones Industrial Average climbed 320 points, to 0.8%, while the S&P 500 rose 0.7% to a record close, and the tech-heavy Nasdaq gained 0.4%.

The Fed, for its part, has a bit of a dilemma on its hands. While it remains focused on bringing inflation down — one reason it is almost certain to leave rates on hold Wednesday — it also doesn’t want to risk leaving rates too high for too long, and send the economy into a recession. Policymakers are in different camps, with one more worried that inflation will be sticky, and the other more attentive to signs of weakening demand and hiring.

Both those concerns were at play in another piece of news Tuesday: Unilever’s decision to shed its ice-cream business, which includes Ben & Jerry’s. As the Heard’s Aaron Back points out, one problem with ice-cream is that it is a highly discretionary purchase, making it easy for consumers to cut back on in response to price increases. But the company also announced it would cut 7,500 mainly white-collar jobs. The Unilever announcement won’t factor in the Fed’s decision-making, though it should be noted that Fed Chairman Jerome Powell is a fan of the Grateful Dead, and Ben & Jerry’s makes Cherry Garcia.

Other News to follow:

The Fed’s policy-setting committee will announce its decision on interest rates Wednesday. With the central bank almost certain to leave rates on hold, attention will quickly turn to what clues it has to offer about when cuts might begin. Separately, General Mills is slated to report results.

Best regards,

Daniel Silva

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