U.S. Futures Flat; Caution Ahead of Fed Announcement

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U.S. Futures Flat; Caution Ahead of Fed Announcement

By Peter Nurse   

Investing.com - U.S. stocks are seen opening in muted fashion Wednesday, with investors cautious ahead of a highly-anticipated Federal Reserve meeting that could adopt a more hawkish policy stance.

At 7 AM ET (1200 GMT), the Dow Futures contract was up 10 points, or 0.1%, S&P 500 Futures traded 2 points, or 0.1%, higher, while Nasdaq 100 Futures dropped 15 points, or 0.1%.

The major averages edged lower Tuesday, handing back some recent gains with growth stocks, in particular, underperforming as more strong inflation data begged a robust response from the Fed.

The Dow Jones Industrial Average dropped just over 100 points, or 0.3%, on Tuesday, the S&P 500 fell 0.8% and the Nasdaq Composite closed 1.1% lower.

Producer prices soared 9.6% on the year in November. 

Fed officials are expected to announce they will accelerate the cuts to their bond-buying program that they announced in November, potentially clearing the path for interest rate hikes in the second quarter of next year.

The Fed makes its announcement at 2 PM ET (1900 GMT), followed 30 minutes later by Chairman Jerome Powell’s press conference. Ahead of that, U.S. retail sales are seen rising by only 0.8% month-on-month in November, less than half of October’s 1.7% growth.

Away from the Fed, investors will continue to study news surrounding the Omicron variant of the Covid-19 virus, particularly after the World Health Organization said Wednesday that preliminary evidence indicates that the current vaccines may be less effective against infection and transmission linked to the new variant, which also carries a higher risk of reinfection.

In the corporate sector, Oracle (NYSE: ORCL ) is likely to be in the spotlight after the U.S. tech giant announced it has opened cloud regions in Stockholm and Milan, while Digital World Acquisition Corp (NASDAQ: DWAC ), the SPAC which is merging with Donald Trump’s new media company, could see extra attention after Trump Media signed a partnership agreement with Canadian-based Rumble.

Lennar (NYSE: LEN ), REV Group (NYSE: REVG ) and ABM Industries (NYSE: ABM ) are all due to report earnings before the open.

Oil prices fell Wednesday, for the third day in a row, on concerns the Omicron-driven rise in coronavirus cases will see demand growth weaken next year. 

The International Energy Agency said on Tuesday a surge in Covid-19 cases will dent global demand for oil at the same time that crude output is set to increase, especially in the United States.

Adding to the bearish tone, data from the industry body, American Petroleum Institute , showed that U.S. crude inventories fell by 815,000 barrels last week, a smaller decline than expected, if corroborated by U.S. Energy Information Administration later Wednesday.

By 7 AM ET, U.S. crude futures traded 1.2% lower at $69.86 a barrel, while the Brent contract fell 1.1% to $72.88. Both contracts have fallen more than 3% this week.

Additionally, gold futures fell 0.1% to $1,770.90/oz, while EUR/USD traded 0.1% higher at 1.1272.

 

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