U.S. stock futures steady ahead of Fed decision

by Jonathan Adams
stock futures

Dow futures advanced 15 points, S&P 500 futures were flat and Nasdaq 100 futures gained 0.03%

U.S. stock futures were steady in overnight trading on Tuesday as investors readied for Wednesday’s Federal Reserve decision.

Dow futures advanced 15 points. S&P 500 futures were flat and Nasdaq 100 futures gained 0.03%.

On Tuesday, the major averages slipped, exacerbated by selling in software names like Microsoft and Adobe. The Dow Jones Industrial Average (DJIA) shed 106 points. The S&P 500 dropped 0.75%.

The technology-focused Nasdaq Composite was the relative underperformer, sliding 1.1% as Facebook-parent Meta Platforms, Amazon, Apple, Netflix and Google-parent Alphabet all finished lower.

Also hurting sentiment Tuesday was the hotter-than-expected inflation reading for November’s producer price index (PPI) showing a year-over-year (YOY) rise of 9.6%, the fastest pace on record. This was above the 9.2% expected by economists, according to Dow Jones. The index gained 0.8% month over month, above the 0.5% expected.

The Fed will conclude its two-day policy meeting on Wednesday and the public will hear from central bank Chair Jerome Powell at a 7:30 pm GMT press conference.

The Fed is grappling with the highest levels of inflation in 39 years and the central bank is widely expected to announce an acceleration of the tapering of its bond-buying program, which was put in place during the pandemic to prop up the economy.

This sets the stage for a dramatic policy shift that will clear the way for a first interest rate hike next year.

While the chairman is not likely to suggest any specific timeframe for when the funds rate will begin to be lifted, he probably will confirm that some members do want to move more quickly than previously announced in raising interest rates, said Jim Paulsen, chief investment strategist for Leuthold Group.

I would not expect the Fed to say much that is not already anticipated by the financial markets, Paulsen added. Some of the recent stock market volatility may lessen after this two-day meeting and its press conference is finally concluded.



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