US stocks slip ahead of Fed's decision on interest rates following bank crisis

• US stocks slipped Wednesday before the Federal Reserve's March rate decision. 
• Traders were pricing in expectations for a rate rise of 25 basis points. 
• The Fed's decision is the first since SVB's collapse set off distress in regional banks. 

US stocks edged lower Wednesday as the Federal Reserve prepared to release its March decision on interest rates, with policy makers weighing distress in the banking industry following the blow-up of Silicon Valley Bank alongside still over-target inflation levels. 

The S&P 500 was sputtering after Tuesday marked its second straight advance and its first close above 4,000 since March 6.  But some speculative stocks lit up as GameStop surged, jumping after the videogames seller unexpectedly posted its first profit in two years. 

The day's marquee event is the Federal Open Market Committee's meeting, the first since the collapse and seizure of tech startups lender SVB. The probability the Fed will raise the Fed funds rate by 25 basis points stood at 89% early Wednesday, according to the CME FedWatch tool. This month, expectations for the Fed's next moves on rates swung by the most since the COVID pandemic was unfolding. 

Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Wednesday: 

•  S&P 500: 3,997.96, down 0.12%
• Dow Jones Industrial Average: 32,515.55, down 0.14% (45.05 points)
• Nasdaq Composite: 11,843.03, down 0.14% 

SVB lost nearly $2 billion on the sale of a bond portfolio whose value was slashed by the Fed's aggressive rate hikes. Spooked depositors quickly yanked billions of dollars from bank and set off a wave of customers pulling their money from small and mid-sized banks and pushing it into larger institutions. 

"When the Federal Reserve adopted a "data dependent" approach to setting monetary policy, I doubt the hour-by-hour monitoring of deposit flows at small and mid-sized banks across the country was part of that calculus," Zachary Hill, head of portfolio management at Horizon Investments, wrote to Insider. "Our expectation is that they will split the difference and hike 25 basis points."

The policy decision is due at 2:00 p.m. Eastern and Fed Chairman Jerome Powell will speak at 2:30 p.m. Eastern. 

"Capital market financial conditions like stock valuations, corporate credit spreads, and the exchange value of the dollar were the Fed's focus up until now, but our sense is that will shift to how effectively the banking system is distributing credit throughout the real economy going forward," said Hill. 

Here's what else is happening today:

Silicon Valley Bank's parent accused the FDIC of "improper actions" to block the firm from accessing $2 billion of its cash.

Cathie Wood says the Fed's rate hikes hit Ark's strategy like an 'earthquake' as the fund logs a $2 billion loss. 

Nobel economist Paul Krugman sounds the recession alarm as banking fears mount - but shrugs off fears of another financial crisis.  

Top economist David Rosenberg said the Fed should put bigger rate hikes back on the table after bouts of 'speculative lunacy'.

Pound jumps after the UK inflation's surprise rebound to 10.4%. 

In commodities, bonds and crypto: 

• West Texas Intermediate crude fell 0.2% to $69.55 per barrel. Brent crude, the international benchmark, slipped 0.3% at $75.12.  
• Gold edged 0.1% to $1,940.40 per ounce.
• The 10-year Treasury yield rose by 3 basis points to 3.64%.
• Bitcoin gained 0.4% to $28,280.50.