Wall Street edged higher, supported by Facebook, Amazon and Apple, as investors await a key Federal Reserve meeting that is expected to lay the groundwork for an interest rate cut later this year. The US central bank is expected to leave borrowing costs unchanged at its two-day policy meeting starting on Tuesday, but its statement will provide insight into the impact of the US-China trade war, President Donald Trump’s calls for a rate cut and weaker economic data.

With investors expecting a rate cut as early as July, the S&P 500 index has risen 5 per cent this month after tumbling in May due to fears about the US-China trade dispute. Bolstering expectations of a rate cut this year, the New York Federal Reserve said its Empire State gauge of business growth in New York state posted a record fall this month to its weakest level in more than two-and-a-half years, suggesting an abrupt contraction in regional activity. The Fed’s rate-setting committee is due to release its statement at 2pm local time on Wednesday, with Fed Chair Jerome Powell holding a press conference shortly after.

The S&P banks index, which tend to benefit from a rising interest rate environment, dropped one per cent, while the broader S&P 500 financial sector fell 0.93 per cent. The S&P 500 was up as much as 0.36 per cent during Monday’s session before giving up most of its gain in the final few minutes of trade. The Dow Jones Industrial Average ended 0.09 per cent higher at 26,112.53 points, while the S&P 500 also gained 0.09 per cent to close at 2889.67.

Morning-Market-Note-Tuesday-18th-June