U.S. stock futures moved higher on Wednesday, ahead of the outcome of a two-day Federal Open Market Committee meeting that is expected to deliver the first 50 basis-point interest rate hike since 2000.
Futures were moving higher alongside oil prices, up on news that the EU has proposed a ban on Russian oil.
How are stock-index futures trading?
- Dow Jones Industrial Average futures YM00, +0.40% rose 121 points, or 0.3%, to 33,151
- S&P 500 futures ES00, +0.43% rose 0.4% to 4,185
- Nasdaq-100 futures NQ00, +0.33% rose 0.2% to 13,120
On Tuesday, the Dow industrials DJIA, +0.20% rose 67.29 points, or 0.2%, to close at 33,128.79, the S&P 500 SPX, +0.48% gained 0.5% to finish at 4,175.48. The Nasdaq Composite COMP, +0.22% added 0.2% to end at 12,563.76.
What’s driving markets?
Alongside a half-point interest rate hike, the Fed is expected to announce the start of “quantitative tightening,” when the central bank’s decision is announced at 2 p.m. Eastern Time. Investors will also focus on a news conference with Fed Chairman Jerome Powell at 2:30 p.m. Eastern Time.
Read: Fed on track for biggest rate hike since 2000
Clarity from the Fed on size and scope of future rate increases could give beleagured stocks a lift, say some analysts.
“With financial conditions tightening ahead of the Fed’s interest rate decision, the Fed could be more dovish. Since the Fed’s last meeting, the 10-year yield topped 3% for the first time since 2018 (today), the U.S. dollar rallied 5%, the S&P 500 has fallen 8.74%, and hedge fund exposures fell to a 1.5-year low,” said the Saxo Bank strategy team, in a note to clients.
A slightly more dovish Fed could lead to a short-term rally for hard-hit tech and cyclical stocks, they said. “Keep in mind though, the longer-term picture is still very bearish, medium and longer-term, as the Fed is taking out $1 trillion a year out of the system and the economy is expected to slow,” said Saxo strategists.
Ahead of Friday’s nonfarm payroll data, investors will get the ADP private-sector employment report at 8:15 a.m. Eastern Time, a March update on the trade balance, due at 8:30 a.m., followed by the Institute for Supply Management’s April services index at 10 a.m. Eastern.
Oil was also in focus, with prices for both Brent BRN00, +3.39% BRNN22, +3.39% and West Texas Intermediate crude CL00, +3.51% CL.1, +3.51% CLM22, +3.51% up over 3% each after the European Union proposed banning Russian oil imports under a phased six-month plan, and refined products within a year.
The move would be part of a sixth batch of EU sanctions against Russia over its invasion in Ukraine that began in late February.
Investors will get a fresh batch of earnings on Wednesday, with Moderna Inc. MRNA, +3.14%, CVS Health Corp. CVS, -0.54% and Yum Brands Inc. YUM, -0.60% among those reporting ahead of the open. After the close, results are expected from eBay Inc. EBAY, +0.58% and Etsy Inc. ETSY, +3.56%, among others.
