Stock futures rise ahead of the Federal Reserve’s expected interest rate hike

Equity futures were slightly higher on Wednesday morning as traders anticipate the upcoming Federal Reserve interest rate hike announcement.

Dow Jones Industrial Average futures rose 42 points, or 0.14%. S&P 500 and Nasdaq 100 futures rose 0.15% and 0.13% respectively.

Shares fell on Tuesday the first day of the Federal Open Market Committee meeting. The Dow Jones Industrial Average lost 313.45 points, or 1.01%. The S&P 500 and the Nasdaq Composite fell 1.13% and 0.95% respectively.

Yields also jumped on Tuesday. The yield on 2-year U.S. Treasuries hit 3.99%, its highest level since 2007. The 10-year Treasury yield briefly touched 3.6%, the highest since 2011.

Investors expect the central bank to deliver its third consecutive rate hike of 0.75 percentage points to rein in high inflation. A higher-than-expected consumer price index in August and hawkish comments on rate hikes from Fed leaders weighed on stocks, with more pressure likely to come as the central bank continues to struggle against the ‘inflation.

“We’ll never really know if the stock market lows are for the year without successfully testing the June lows,” John Lynch, chief investment officer at Comerica Wealth Management said in a Tuesday note. “Certainly the recent technical weakness in stock prices must now be met with the determination of monetary policy makers in their fight against inflation.”

He added that the third-quarter earnings season could also add headwinds for stock prices if they show further margin erosion for U.S. companies.

Investors will also be watching earnings from Lennar, KB Homes, General Mills and Steelcase on Wednesday. Existing home sales will also be released Wednesday morning.

Leave a Comment

Your email address will not be published.