Nasdaq, S&P 500 Futures Show Cautious Optimism As All Eyes On Fed Decision Today For Market Direction

Zinger Key Points
  • As Fed decision draws closer, there are hawkish expectations for even a 100 basis point increment.
  • The language of the Fed statement is more important to gauge the future trajectory of interest rates.

U.S. index futures point to a modestly higher open on Wednesday, as traders position themselves for the Fed rate decision due in the afternoon.

The major averages declined Tuesday but closed off the lows of the session amid Fed jitters. The selling was across the board, with real estate, materials, consumer discretionary, and communications stocks seeing marked weakness.

With Tuesday’s retreat, the major averages pulled back to their lowest levels in over two months.

U.S. Indices' Performance On Tuesday
Index Performance (+/-)   Value
Nasdaq Composite -0.95%   11,425.05
S&P 500 Index -1.13%   3,855.93
Dow Industrials -1.01%   30,706.23

Here’s a peek into index futures trading:

U.S. Futures' Performance On Wednesday During Premarket Session
Index Performance (+/-)  
Nasdaq 100 Futures +0.11%  
S&P 500 Futures +0.27%  
Dow Futures +0.31%  
R2K Futures +0.56%  

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was rising 0.23% to $384.96 and the Invesco QQQ Trust QQQ was moving up 0.07% to $288.93, according to Benzinga Pro data.

On the economic front, the Federal Open Market Committee — the policy-setting arm, of the Federal Reserve, will announce its fed funds rate decision at 2 p.m. EDT. Economists widely expect the central bank to raise rates by 75 basis points to 3-3.25%. Fed Chair Jerome Powell will host a press conference at 2:30 p.m. EDT to explain away the thinking that went into the rate decision.

Brad McMillan, chief investment officer for Commonwealth Financial Network, expects a softer emphasis on data dependence for coming meetings.

"While this will still remain, objectively, a hawkish stance, it will likely be interpreted as more dovish compared to current expectations, which could be good for markets," he said.

Ahead of the Fed decision, the National Association of Realtors will release the existing home sales report for August at 10 a.m. EDT. The consensus estimate calls for a 1.3% month-over-month decline, steeper than the 5.9% drop in July.

See also: Analyst: S&P 500 Breaks Below Key Technical Support Level As It Enters Its Most Bearish Period Of The Year

Stocks In Focus

  • Mineral exploration company Ivanhoe Electric Inc. IE is advancing after it provided a positive update on its Tintic Copper-Gold Project in Utah. Other miners including Comstock Inc. LODE, were also gaining.
  • Micron Technology, Inc. MU was slipping after Wells Fargo lowered its price target on the shares from $90 to $75.

Commodity, Global Markets

Crude oil futures are climbing after Tuesday’s 1.49% retreat. A barrel of WTI crude oil is currently at $85.98, up 2.43%.

The U.S. dollar is seen modestly stronger against its major counterparts ahead of the Fed decision.

The major Asian markets fell across the board on Wednesday, tracking the negative lead from Wall Street overnight, with traders preferring to stay on the sidelines ahead of the U.S. rate decision.

In Europe, stocks were showing tentativeness, although the U.K. market was seen advancing moderately.

Photo: Courtesy of International Monetary Fund on Flickr

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