Stock futures were flat on Tuesday evening as investors await the Federal Reserve’s latest interest rate hike decision in its effort to crush inflation, due out on Wednesday.
Dow Jones Industrial Average futures rose 4 points, or 0.01%. Futures contracts related to the S&P 500 and the Nasdaq 100 rose 0.01% and fell 0.02% respectively.
Stocks rose for a second day during regular trading on Tuesday, fueled by a inflation report cooler than expected. November’s consumer price index was 7.1% on the year, less than the 7.3% gain expected by economists polled by Dow Jones. The 0.1% increase from the previous month was also lower than expected.
The signal that inflation may have peaked was positive for equities as it means the Fed could be on the verge of halting interest rate hikes or switching to cuts, fueling the actions.
On Wednesday, the central bank will wrap up its December meeting and announce its latest rate hike. Investors are largely expecting a 50 basis point increase – or half a percentage point – a smaller bump after four consecutive 75 basis point increases. A basis point is equal to one hundredth of one percent.
Chairman Jerome Powell will also speak on Wednesday, giving further clues about what’s coming from the Fed in 2023. In previous meetings this year, traders have been sensitive to Powell’s language, interpreting his tone as hawkish or dovish. .
“The market obviously thinks there’s going to be a pivot or a pause, that’s what we saw today,” Grasso Global CEO Steve Grasso said on CNBC’s “Fast Money.” “Whether [Powell] put a wet blanket on it, the market will sell out.”
The Fed meeting is the last of the year. The next central bank meeting will take place from January 31 to February 1, 2023.