U.S. stock futures are on a modest uptick as traders eagerly await the Federal Reserve’s decision and Chairman Powell’s remarks. In the meantime, oil prices have pulled back from their recent 10-month highs, and Treasury yields have eased from multi-year peaks.
Current State of Stock Futures:
Market Performance from Tuesday:
Market Outlook:
U.S. markets are exhibiting a subdued tone as traders brace themselves ahead of the Federal Open Market Committee’s policy decision, slated for 2 p.m. Eastern time. This year, the S&P 500 has made significant gains, partly fueled by expectations that the Fed’s monetary tightening will conclude without causing significant harm to the economy.
Tom Lee, Head of Research at Fundstrat Global Advisors, highlights that “Investors are naturally apprehensive that Wednesday’s FOMC press conference could trigger higher interest rates and a consequent sell-off in stocks.”
Traders are currently pricing in a 99% likelihood that the Federal Reserve will maintain rates within the 5.25%-5.50% range, according to the CME FedWatch Tool. Nevertheless, there’s a 29% chance of a 25-basis-point rate hike to a range of 5.50%-5.75% at the subsequent meeting in November.
Recent robust U.S. economic data and this week’s surge in oil prices have raised concerns about lingering inflationary pressures, potentially necessitating the central bank to maintain elevated borrowing costs.
Thierry Wizman, global FX and interest rates strategist at Macquarie, suggests that the surge in oil prices could make the FOMC more hesitant to convey a dovish stance. Consequently, traders will closely monitor the Fed’s release of its “dot plot” forecast for policy interest rates at 2 p.m., as well as Chair Jerome Powell’s press conference at 2:30 p.m., for any market-shaping information.
Stephen Innes, managing partner at SPI Asset Management, points out that yields on 10-year U.S. Treasuries are reaching new cycle highs, and investors seem inclined to maintain their dollar positions, signaling a hawkish direction.
Matthew Raskin, strategist at Deutsche Bank, notes that traders’ primary focus will center on the Fed’s economic projections and the “dot plot.” Any shifts in these indicators will be closely analyzed for implications, with the degree of these shifts and Powell’s interpretation of them playing a pivotal role.
Companies in the Spotlight:
When stocks are booming and bonds are lagging, as they are now, it can be…
Hold on to your hats. The Dow Jones Industrial Average briefly traded above 40,000 for…
Today is Wednesday, May 16th, and we're going to talk about the Dow Jones, its…
Data on U.S. consumer prices, the most anticipated report of the month, was released early,…
In the fast-paced world of day trading, having a solid strategy and the right tools…
The stock market has rebounded in May, nearing record territory after April's pullback. The upcoming…