Market Snapshot: U.S. stock futures climb ahead of key Fed decision

Banking


U.S. stock futures rose on Wednesday as the countdown began for investors to a decision from the Federal Reserve, which is widely expected to increase rates by a quarter of a percentage point and offer details on path forward for monetary policy.

What did are markets doing?

Dow Jones Industrial Average futures

YMU8, +0.16%

 rose 39 points, or 0.1%, to 25,343, while S&P 500 futures

ESU8, +0.20%

 added 4.55 points, or 0.2%, to 2,792.50. Nasdaq-100 futures

NQU8, +0.32%

 rose 18.50 points, or 0.3%, to 7,244.25.

On Tuesday, the Dow

DJIA, -0.01%

logged its first loss in five sessions, closing fractionally lower at 25,320.73. The S&P 500

SPX, +0.17%

 advanced 0.2%, while the Nasdaq

COMP, +0.57%

 added 0.6%.

The Russell 2000 index of small-cap stocks

RUT, +0.46%

 closed at an all-time high at 1,681.95, up 0.4%.

Read: Fund managers are overweight U.S. stocks for first time in 15 months

What’s driving the market?

While investors continue to monitor any potential fallout from the meeting between President Donald Trump and North Korean leader Kim Jong Un, attention will move squarely toward the conclusion of the Fed’s two-day meeting on Wednesday.

A statement from the central bank is due at 2 p.m. Eastern Time, followed by a press conference with Chairman Jerome Powell at 2:30 p.m. Eastern.

Investors have priced in expectations that the Fed will lift the target range for the federal-funds rate to a range between 1.75% to 2%, from 1.5% to 1.75%, marking the second rate hike this year and the seventh move since the start of the tightening cycle in December of 2015. The central bank’s updated “dot-plot”, a chart of the projections for interest rates of Fed members, also will offer a clearer outline for how many rate hikes may be in the offing in coming months and years, which holds significance for the broader market because it can influence the strength of the dollar and the degree by which borrowing costs increase over time. Higher rates and a stronger dollar can contribute to how investors value stocks and other assets.

Read: Five questions likely to be fired at Fed’s Powell on Wednesday

Also: Fed goal is to signal an ‘unhurried’ pace of interest-rate hikes

Looking ahead, the European Central Bank policy makers are expected on Thursday to announce the timing for unwinding bond buying, while the Bank of Japan will release its policy decision on Friday.

Ahead of the Fed statement, data on producer prices for May are due at 8:30 a.m. Eastern.

Check out: How stock investors can profit from this week’s Fed meeting

What are strategists saying?

“Three straight days of clean gains and a fourth firm start for the dollar and 10-year Treasury yields reflect the complete absence of uncertainty about the Federal Reserve’s policy decision tonight,” said Ken Odeluga, market analyst at City Index, in a note.

“Only one more 25-basis point rise is fully priced in 2018, probably in September … leaving only December … for more tightening. Then the horizon goes hazy. In short, we market participants would like to think we’ve got the rates outlook sewn up, but uncertainty is the only certainty,” he said.

“The immediate market reaction [to the Fed] is likely to colored by whether the median forecast in the dot plot moves to four hikes this year. We think it will, but would caution against reading too much into this measure which is always prone to discrete jumps,” said Adam Cole, chief currency strategist at RBC Capital Markets, in a note.

“We don’t anticipate dramatic changes in the characterization of economic growth or inflation in the press statement,” Cole added.

What stocks could be active?

H&R Block Inc.

HRB, +0.75%

 shares plunged 19% in premarket trade, adding to sharp loss late Tuesday even as the tax-preparation company posted a first-quarter earnings beat and lifted its dividend.

Shares of AT&T Inc.

T, +0.50%

 lost 2% ahead of the bell after falling almost 3% in Tuesday’s extended session, while Time Warner Inc.

TWX, +0.05%

 jumped 4.5% premarket after Tuesday’s court ruling that AT&T can go ahead with its nearly $85 billion acquisition of Time Warner.

And 21st Century Fox Inc.

FOX, +1.18%

 surged 7% in late trade, as that ruling will likely give the media group the go-ahead to sell some of its TV and movie assets. Fox has agreed to a $52.4 billion all-stock deal with Walt Disney Co.

DIS, -0.02%

whose shares slipped 1.4%. However, rival Comcast Corp.

CMCSA, +1.19%

 is expected announce a rival bid $60 billion all-cash bid as soon as Wednesday. Comcast shares fell nearly 3% in late trade.

Pivotal Software Inc.

PVTL, +1.29%

 shares jumped 5% late Tuesday after the cloud-software company issued an earnings beat in its first report since an April initial public offering. Chief Executive Officer Rob Mee told MarketWatch in an interview that the company is focused on subscription revenue.

What are other markets doing?

The ICE U.S. Dollar Index

DXY, -0.03%

 , which measures the buck against six rivals, was up 0.1% at 93.916.

Asian stocks were mixed, while European stocks

SXXP, +0.32%

 started to find slightly higher footing.

Crude-oil futures were moving lower, with July West Texas Intermediate crude

CLN8, -0.18%

 down 0.3% at $66.10. Gold futures

GCM8, -0.32%

slipped 0.1% to $1,297.60 an ounce, after tapping a high near $1,305 during the session.

We Want to
Hear from You

Join the conversation

Leave a Reply

Your email address will not be published. Required fields are marked *