Stock Index ETFs Rally Ahead Of FOMC Meeting | ETF Trends

After a lackluster performance on Tuesday, stocks, and index ETFs are climbing higher ahead of the Federal Reserve policy meeting on Wednesday as investors also readied for a congressional hearing on antitrust from the major technology companies.

The Dow Jones Industrial Average advanced gained 100 points, or 0.42%, while the S&P 500 added 0.96%., and the Nasdaq Composite advanced 1.2%. All three indexes were down on Tuesday in what has been a mixed week of trading so far.

Stock index ETFs are trading in the green along with their underlying benchmarks. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), are higher Wednesday, while the Invesco QQQ Trust (QQQ) has been mixed this week, is trading higher today as well.

The Fed will finish its two-day policy meeting Wednesday and is scheduled to deliver a statement at 2 p.m. EST, followed by a press conference from Fed Chair Jerome Powell. Analysts and economists predict that the central bank will maintain interest rates unchanged at near zero to bolster the fragile economy that is still plagued by the coronavirus pandemic.


“Markets continue to expect ultra-accommodative policy from the Fed, and the Fed is unlikely to disappoint at this meeting,” Bill Callahan, investment strategist at Schroders, said in an email. “Given that we are still squarely in the center of the pandemic, the only question for investors is just how dovish the Fed will be.”

As investors await the Fed meeting, key executives at major tech companies Amazon, Apple, Facebook, and Alphabet are set to testify before the House Antitrust Subcommittee later Wednesday after a significant study of their anti-competitive practices. Moves from the committee could roil markets, as tech has been a crucial player in the stock market’s rally off of the March lows.

Facebook and Alphabet are both up more than 12% year to date entering Wednesday’s session. Amazon has surged 62.4% over that time and Apple is up 27%. The Vanguard Growth ETF(VUG) gained as well amid the tech advance.

The busiest week of the earnings season is moving along, with General Electric and Boeing releasing mixed quarterly figures. GE reported a stronger-than-forecast revenue along with a wider-than-projected loss, dropping 4.4% in trading Wednesday as a result, while Boeing stock fell 3% after posting losses. Analysts are cautiously optimistic about future earnings, however.

“It’s clear that the worst is over for corporate profits,” said David Lefkowitz, head of equities for the Americas at UBS Global Wealth Management. “However, the pace of the recovery is still contingent on the path of the virus and further government stimulus.”

“In our view, this will be very important as a number of companies have called out how government support has been crucial to the recovery and businesses anticipate that more will be needed,” Lefkowitz said in a note.

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