Preeti Ayyathurai
4 min read
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The Federal Reserve is likely to raise interest rates for the first time in three years today. All eyes will be on Fed Chair Kevin Warsh’s commentary on the rate path beyond September.
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The Fed is scheduled to announce its decision at 2 p.m. ET, followed by press conference at 2:30 p.m.
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Intel and SK Hynix are on retail radar after reports that the South Korean memory-chip maker is in talks with Intel about potentially manufacturing memory chips in the U.S. for the first time.
U.S. stock futures edged higher early Wednesday as investors looked past another weak session on Wall Street and turned to the Federal Reserve’s interest rate decision today. Markets are pricing in a 92.5% probability of a rate hike, which would be the first since July 2023, to combat sticky inflation and geopolitical energy shocks.
As of 4:00 a.m. ET, Nasdaq futures rose 0.4%, S&P 500 futures gained 0.1%, while Dow and Russell 2000 futures were flat with a positive bias.
On Stocktwits, retail sentiment for the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, and Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 Index, has moved to ‘bearish’ from ‘extremely bearish’ a day ago.
Fed Decision Takes Center Stage
The Federal Reserve will release its policy decision at 2 p.m. ET, followed by updated economic projections and Fed Chair Kevin Warsh’s press conference at 2:30 p.m. This meeting comes amid a mixed macro backdrop, with crude oil above $100 a barrel and the 10-year Treasury yield above 5%, raising concerns about higher borrowing costs and their impact on loans and financing.
Investment advisor Gary Black said in a post on X that an immediate 25-basis-point rate increase by the Federal Reserve would be healthier for stock markets than risking a prolonged tightening cycle driven by surging oil prices. He added that a measured, single rate adjustment, clearly communicated by policymakers, could ultimately push 10-year yields lower.
Tech Stocks Remain In Spotlight
Intel (INTC) and SK Hynix (SKHY): Shares rose over 3% in early premarket trade following reports that SK Hynix is in talks with Intel about a deal that could see the South Korean memory maker manufacture chips in America for the first time. Separately, reports suggest that SK Hynix has also resolved a internal union dispute by agreeing to pay half of profit-sharing bonuses in cash.
