Market Overview: US Fed Rate Decision, Icahn's Fund Targeted, Stock Futures Rise and Qualcomm's Insights

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US Federal Reserve to reveal its latest rate decision

The Federal Reserve is due to reveal its latest rate decision on May 3, 2023, with most market analysts expecting the U.S. central bank to raise interest rates by another 25 basis points, bringing it to a floor of 5%. The anticipated increase will take borrowing costs from 0% to 5% in about a year, and the unprecedented scale and pace of these increases highlight how desperate policymakers have been to bring down soaring inflation. However, investors will be keen to see whether the Fed will push pause on its rate-rising campaign, and if so, for how long. The tightening of borrowing costs is taking a toll on the US banking system, while recent data suggests that the labor market is cooling and the economy is slowing.

US stock futures point higher ahead of Fed decision

U.S. stock futures pointed higher on May 3, 2023, as investors await the Federal Reserve's decision on interest rates and any commentary about the central bank's future plans. The Dow futures contract was up by 0.12%, the S&P 500 futures traded 0.15% higher, and the Nasdaq 100 futures moved up 0.18%. Comments on the path ahead for borrowing costs and the state of the financial system will be in focus when Fed Chair Jerome Powell makes his scheduled remarks following the interest rate announcement.

Billionaire Carl Icahn's publicly listed fund targeted by short-seller Hindenburg

Short-seller Hindenburg Research has targeted billionaire Carl Icahn's publicly listed fund, Icahn Enterprises LP, in a recent report alleging that the fund is inflating the value of its assets. IEP is trading at a heavy premium relative to its peers, and Hindenburg claims that the firm is using sales of newly issued stock to pay out to old investors a frothy cash dividend of around 16%, which is the highest of U.S. large-cap firms. According to Reuters, Icahn receives his dividend in stock rather than in cash. Icahn, however, stood by the fund's public disclosures and hit out at Hindenburg, saying its allegations were a self-serving ploy to boost its own short position. Midsize U.S. banks also saw their shares fall sharply on May 2, 2023, in a sign that the rescue of First Republic Bank has not yet assuaged all concerns over the state of the banking sector.

Qualcomm to provide insight into US smartphone market

Qualcomm, the mobile chip supplier, is expected to provide insight into the state of the US smartphone market with the release of its latest earnings report on May 3, 2023. Investors hope that the report will provide clarity on the impact of economic concerns and stubbornly elevated inflation on consumer spending. Analysts worry that demand for Qualcomm's semiconductors may soften as a result of stockpiles of handset parts growing at Qualcomm's customers.

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