Stock futures in the U.S. are pointing to a mixed open on Wednesday as investors digest the latest reports from Microsoft and Alphabet. All eyes are now on the Federal Reserve policy decision, set to be announced later today.
Current Performance of Stock-Index Futures
- S&P 500 futures (ES00) rose 1 point, or 0%, to 4597
- Dow Jones Industrial Average futures (YM00) fell 35 points, or 0.1%, to 35569
- Nasdaq 100 futures (NQ00) eased 11 points, or 0.1%, to 15662
Yesterday’s Market Performance
On Tuesday, the Dow Jones Industrial Average rose by 27 points, or 0.08%, to reach 35438. The S&P 500 increased by 13 points, or 0.28%, closing at 4567. The Nasdaq Composite gained 86 points, or 0.61%, reaching 14145.
Anticipation for Federal Reserve Policy Decision
In the lead up to the Federal Reserve’s monetary policy decision, which is expected to be announced at 2 p.m. Eastern Time, moves in equity index futures have been modest. Traders are refraining from making significant bets as they await guidance from the central bank.
The market widely anticipates another 25 basis point increase in interest rates, bringing the range to 5.25% to 5.50%. However, there is uncertainty regarding whether this will mark the end of the current tightening cycle.
As a result, all eyes will be on the Fed’s accompanying statement and comments from Chair Jerome Powell during his press conference, scheduled for 2:30 p.m. Investors are eagerly seeking guidance on the future trajectory of borrowing costs.
The Focus Shifts to the Fed’s Views on Inflation War
Tom Lee, the head of research at Fundstrat, stressed the importance of the qualitative views around the Fed’s sense of progress on the inflation war in his note to clients. While a 25 basis point hike is expected, it is these views that will truly impact the markets. According to Lee, considering the likely comments from the Fed and the current market setup, the probabilities are leaning towards a post-FOMC rally of over 1% for the S&P 500.
Earnings Reactions Affect Market Activity
On Wednesday, the market experienced relative stasis due to counteracting reactions on the earnings front. Tech giants Microsoft and Alphabet saw divergent movements in their shares following the release of their results and guidance on Tuesday. As a result, the Nasdaq Composite is expected to have a slightly softer start to the new session.
Earnings Season Continues
This week, approximately 170 companies from the S&P 500, representing about 40% of the benchmark’s market capitalization, will report their earnings. Before Wednesday’s opening bell, AT&T, Boeing, Coca-Cola, and General Dynamics will publish their results. After the close, Meta Platforms, Lam Research, and eBay will take the spotlight.
Key Economic Updates
Apart from earnings reports, Wednesday will also bring important economic updates for investors. New home sales data for June is scheduled for release at 10 a.m. Eastern time.
