Investing.com – Wall Street traded slightly higher on Wednesday with the Bank of Japan (BoJ) policy decision and oil inventories left behind and all the markets’ attention focusing on the upcoming date with the Federal Reserve (Fed) and its chief Janet Yellen.
At 11:54AM ET (15:54GMT), the Dow Jones gained 46 points, or 0.26%, while the S&P 500 advanced 5 points, or 0.24%, and the tech-heavy Nasdaq Composite inched up 5 points, or 0.09%.
The Bank of Japan (BoJ) rebooted its stimulus program Wednesday with new tactics, although the Japanese central bank left interest rates and asset purchases unchanged.
Amid the actual changes, the BoJ removed the cap to its inflation target stating its intention to continue intervention until inflation exceeds the 2% mark “and stays above the target in a stable manner”.
Furthermore, it implemented a so-called “yield curve control” which is designed to cap 10-year government bond yields at 0%.
Japanese equities and the dollar-yen initially spiked, with the Nikkei 225 pocketing gains of 1.9% and the USD/JPY initially rising by more than 1% to a session high of 102.78 immediately after the BoJ's policy decision.
However, sentiment ran out and the yen turned around as skepticism over the tweaks to policy began to grow throughout Wednesday’s session.
Meanwhile, crude oil benefitted from a surprise drop in U.S. inventories. The knee-jerk reaction took black gold to intraday highs and, though gains were later pared, West Texas remained above the $45 psychological level.
U.S. crude oil futures gained 2.61% to $45.20 by 11:56AM ET (15:56GMT), while Brent oil rose 2.11% to $46.85.
With these two events under their belt, market participants adjusted trades in anticipation of its appointment with the Fed.
The Fed is not expected to make a move on interest rates at 2:00PM ET (18:00GMT) on Wednesday, but investors will first focus on the statement and updated forecasts for economic growth and interest rates that will be released simultaneously with the rate decision for a first gauge on when the central bank contemplates returning to policy normalization.
Fed chair Janet Yellen will then hold what will be a closely-watched press conference 30 minutes after the release as investors look for any change in tone about the economy or future rate hikes.
Markets are currently pricing in just a 15% chance of a rate hike at this meeting, according to Investing.com's Fed Rate Monitor Tool. For the meetings in November and December odds stood at 24.8% and 60.7%, respectively.
With nothing else of note on the economic calendar Wednesday, the Organization for Economic Cooperation and Development (OECD) cut its forecast for global growth to 2.9% this year, down from a forecast of 3.0% in its last estimates in June. This was the lowest level since the global financial crisis of 2008-2009.
"This is well below past norms and implies that globalization as measured by trade intensity may have stalled," the Paris-based organization said.
The OECD also cut its forecast for growth in the U.S. economy to 1.4% this year, from the prior estimate of 1.8%.
On the business front, Microsoft (NASDAQ:MSFT) shares rose more than 1% after the tech giant raised its quarterly dividend by 8% on Tuesday and said it would buy back up to $40 billion as part of a new share repurchase program.
In big movers on earnings, shares of FedEx (NYSE:FDX) jumped more than 6% after the shipping giant released better than expected quarterly results after Tuesday's closing bell.
Adobe Systems (NASDAQ:ADBE) rallied close to 7% after the software company reported quarterly earnings of 75 cents per share late Tuesday, beating expectations of 72 cents per share.
On the downside, CarMax (NYSE:KMX) fell more than 2% after both earnings and revenue missed forecasts.
Bed Bath & Beyond (NASDAQ:BBBY) and Red Hat (NYSE:RHT) report after the close.