5 things to know before the stock market opens Wednesday

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Here are the most important news, trends and analysis that investors need to start their trading day:

1. Wall Street set to give back much of Tuesday’s gains

Traders on the floor of the NYSE, June 16, 2022.

Source: NYSE

U.S. stock futures fell Wednesday, pointing to an open that would give up most of the prior session’s strong rally ahead of Day One of Federal Reserve Chairman Jerome Powell’s economic testimony on Capitol Hill. The Dow Jones Industrial Average rose 641 points, or 2.15%, on Tuesday to kick off the holiday-shortened week. The S&P 500 and the Nasdaq gained 2.45% and 2.51%, respectively. Tuesday’s bounce came after the S&P 500 had its worst week since March 2020, the month the Covid pandemic was declared.

2. It’s Day 1 of Fed chief Powell’s economic testimony

Federal Reserve Board Chairman Jerome Powell speaks to reporters after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., June 15, 2022.

Elizabeth Frantz | Reuters

Powell is set to deliver the Fed’s twice-yearly monetary policy report to the Senate Banking Committee on Wednesday and the House Financial Services Committee on Thursday. The Fed chief will give prepared remarks and face questions from lawmakers. Soaring inflation and whether the central bank is doing enough to stop it will no doubt be a major focus of the hearings. In a preview last week, the Fed said that fighting inflation is “unconditional.” The Fed raised rates 75 basis points at its June meeting and forecast a hike of a similar magnitude at its next meeting in July.

3. Biden is expected call for temporary federal gas tax suspension

Fuel prices at a Chevron gas station in San Francisco June 9, 2022.

Bloomberg | Bloomberg | Getty Images

Oil prices dropped 4% to around $105 per barrel on Wednesday, hours before President Joe Biden’s expected afternoon announcement calling for a temporary suspension of the federal gasoline tax of 18.4 cents per gallon. However, a gas tax holiday faces significant opposition in Congress, including among many Democrats. Gas prices remain near $5 per gallon nationally heading into the thick of the summer driving season. Biden has pulled numerous levers to try to lower prices, including a record release of barrels from U.S. strategic reserves, production waivers, and pressuring OPEC countries and U.S. energy companies to boost output.

4. Rising rates boost demand for riskier adjustable-rate mortgages

5. Bitcoin holds above a key level it went below Saturday

Bitcoin on Wednesday held above $20,000, but it was trading lower. The world’s biggest cryptocurrency on Tuesday fought its way back from Saturday’s plunge to below $18,000, falling below the key $20,000 level for the first time since December 2020. At its low point Saturday, bitcoin was about 74% below its all-time high of more than $68,000 in November, which was the month of the Nasdaq’s last record high. The overall crypto market capitalization is roughly $950 billion, according to price site Coinmarketcap, down from a peak of $2.9 trillion in November 2021.

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