The stock market is experiencing a lot of volatility before the opening bell rings this morning, with stocks making big moves. Robinhood has seen an increase in volume by 1% and McDonald’s has seen an increase in volume by 3%. Microsoft has seen a decrease in volume by 2%, but it is still seeing growth putting it at 7% over the last 12 months.
The Federal Open Market Committee (FOMC) will be releasing its economic outlook at 2:00 PM EST this afternoon. Economists expect a rate hike to between 1% and 1.25%. The FOMC is a committee that consists of the board members of the Federal Reserve System who meet eight times per year to determine interest rates. The FOMC meets in March, June, September, and December of each year. It is widely believed that the Committee will raise rates by 25 basis points today.
If a rate hike does take place this afternoon it would be the second time since President Trump took office on January 20. There was a 25 basis point increase at the March 13th meeting. Another increase would likely be followed by another rate hike in June.
Wage growth has also caught the attention of the FOMC, according to MarketWatch The Fed is keeping an eye on broad measures of wages and compensation as indicators of whether inflation will pick up momentum this year after running below its 2% target for seven years. Growth in the employment cost index slowed to a 0.6% annual rate from January through March, from a 2.5% pace in the fourth quarter.
The Federal Reserve Board is expected to raise interest rates by a quarter point today and plans to continue scaling back its massive bond holdings, according to The Wall Street Journal . The Federal Open Market Committee is projected to raise its benchmark rate by a quarter point to a range of 1.5% to 1.75%, the second increase this year and only the third since 2006, when rates were cut to zero during the financial crisis. It would also signal plans to continue shrinking its balance sheet, which swelled from around $800 billion before the financial crisis to $4.5 trillion as a result of its bond-buying stimulus programs and big role as lender of last resort.
The U.S. dollar has been on the rise ever since President Trump was elected, but recent actions from the White House have shown that things might not be going as planned for the President. The Washington Post reports that the U.S. dollar has fallen 5 percent against several world currencies in recent weeks, making it one of the worst performing major currencies since April 1st. The greenback has fallen nearly 8% since January 20th after enjoying a rise to 13-year highs following Trump’s election victory on November 8th.
Other important economic news today includes the Producer Price Index (PPI) and Consumer Price Index (CPI), both out at 8:30 AM EST, and the Unemployment Claims at 8:30 AM EST. Yesterday’s Personal Income & Outlays report showed a 0.1% increase in Personal Income while the Core PCE Price Index grew by 0.1%. Personal Spending grew by 0.4%, while Core PCE prices increased by 0.2% in January leading to an increase in the PCE Deflator of 0.1%. These numbers will be important in helping investors determine whether or not inflation is accelerating or slowing down under President Trump.