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US stocks rose modestly on Wednesday morning ahead of the Federal Reserve’s decision on whether to hike interest rates for the first time in three years.
Futures on the Dow Jones Industrial Average (YM=F) edged up 0.1%; the S&P 500 (ES=F) rose 0.2%, and the Nasdaq-100 (NQ=F) gained 0.4% in premarket trading.
Stocks searched for gains after ending Tuesday’s session lower. A bond sell-off that has pushed the 10-year yield (^TNX) to its highest level since the financial crisis weighed on stock sentiment.
Crypto prices tumbled, meanwhile, after the Senate failed to pass a key procedural vote for a regulatory framework for digital assets, known as the Clarity Act. Bitcoin’s price (BTC-USD) dropped 2% to the $75,000 level.
At the same time, rising oil prices have contributed to worries that inflation will remain stubbornly high. Despite a pause in crude oil’s rally, benchmark Brent (BZ=F) and WTI (CL=F) futures remain above $100 per barrel.
That sets the stage for Wednesday’s crucial events: the Federal Reserve rate decision, the release of the Fed’s dot plot, and Fed Chairman Kevin Warsh’s press conference. Traders overwhelmingly expect the Fed to hike rates on Wednesday, with odds at 92%, according to CME Group.
Should Warsh and FOMC policymakers follow through with a hike, it could set the Fed up to clash with the White House, as President Trump has ratcheted up calls for lower interest rates.
Follow live coverage of the Fed meeting
In other economic data releases, August retail sales are expected to have reaccelerated, while a NAHB housing market indicator is expected to cool amid rising mortgage rates.
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Asian markets make nervous start ahead of Fed decision
Reuters reports:
Stocks made tentative gains at the start of the Asian trading session on Wednesday as a rise in global bond yields and oil prices paused ahead of the Federal Reserve’s policy decision due later in the day.
MSCI’s broadest index of Asia-Pacific shares outside Japan fluctuated between gains and losses after declining for four consecutive sessions and was last up 0.2%, led by a 0.8% gain in Korean shares. S&P 500 e-mini futures nudged 0.1% higher.
Overnight on Wall Street, the S&P 500 slumped 0.5%, marking its second consecutive day of declines as the yield on the 10-year Treasury bond hit its highest level since 2007.
“U.S. equity markets closed lower overnight as rising Treasury yields, another jump in crude and the polarised debate around pacing AI development left the market in a cautious mood,” said Tony Sycamore, market analyst at IG in Sydney.
