Stock futures edged higher on Wednesday as investors braced for the Fed’s latest policy decision at the end of the meeting.
Futures linked to the Dow Jones Industrial Average rose 9 points, or 0.03%. S&P 500 futures rose 0.14% and Nasdaq 100 futures rose 0.2%.
The Fed is widely expected to announce a rate hike of 0.75 percentage point, the fourth consecutive rate hike by the central bank as it battles high inflation. Investors are also looking for a signal that the central bank is preparing to slow the pace of interest rate hikes in December.
Comments from the Federal Reserve and Fed Chairman Jerome Powell will play a key role in interpreting the direction of the stock market in the coming months and whether the market is embarking on a new bull run.
“The continuation of the year-end rally depends on whether the Fed delivers on its pivot narrative,” Barclays’ Emmanuel Cau wrote in a note to clients on Wednesday. “Hawk peaks could fuel more FOMO, but it shouldn’t Confused with dovish because CB continues to go the good way. Rate cuts have been a prerequisite for stocks to start a new bull market in the past – we haven’t.”
The central bank’s decision will follow mixed economic data on Tuesday.
The ISM manufacturing index showed a slightly higher-than-expected share of companies reporting expansion in October, while the JOLTS report conveyed a strong labor market despite aggressive Fed tightening.
“It’s not a great number for the Fed, it’s still a tight jobs market,” Victoria Greene, chief investment officer at G Squared Private Wealth, said Thursday on CNBC’s “Closing Bell: Overtime.” So I think they’re still in rocky and tough places. They’re going to have to hike. Nobody likes it. Everyone wants them to stop, but it’s like a slow-motion crash. They just can’t stop hiking.”
In other economic news, mortgage applications were flat last week despite a slight drop in interest rates. ADP’s employment report is also due on Wednesday.