Stock futures fall as traders await the Federal Reserve’s latest rate hike decision
Traders on the floor of the NYSE
Source: NYSE
Stock futures fell on Wednesday as investors looked ahead to the Federal Reserve’s Wednesday meeting.
Futures tied to the Dow Jones Industrial Average lost 140 points, or 0.4%. S&P 500 futures and Nasdaq Composite futures were down 0.4% and 0.3%, respectively.
The Fed at 2pm ET will announce how much it is raising interest rates in its latest attempt to curb high inflation. Markets expect a shock of 25 basis points, or 0.25 percentage points, from the central bank. On Tuesday, the employment cost index, a measure of wage gains, showed compensation rose 1[ads1]% in the fourth quarter, less than the Dow Jones estimate of 1.1%.
Still, traders can get ahead of themselves by expecting a more dovish tone from the Fed, or look for signs that a pause in gains or even a pivot is coming soon.
“Aggressive tightening in 2022 has led to signs of easing inflation, but from levels that remain unacceptably high,” Lazard market strategist Ron Temple said in a Tuesday note. “With a 25 bps hike already discounted by markets, Powell’s task is to unequivocally signal the Fed’s commitment to taming inflation.”
The Fed’s announcement will be followed by comments from Chairman Jerome Powell.
Wall Street is coming off a strong session until the end of January. The Dow ended Tuesday nearly 369 points higher, rising 1.09%. The S&P 500 rose 1.46% to cap its best January performance since 2019. The tech-heavy Nasdaq Composite rose 1.67%, its best January performance in 22 years.
The earnings season also continues. Peloton and Meta Platforms are scheduled to report quarterly results on Wednesday.
Snap shares fell more than 15% after the social media company posted disappointing quarterly earnings. The company’s average revenue per user, a key metric for Snap, also came in below expectations. Meanwhile, AMD reported better-than-expected revenue and earnings, but warned of a 10% top-line decline in the first quarter.
