US pre-open: Futures trade higher ahead of Fed decision
By Iain Gilbert
Date: Wednesday 26 Jan 2022
(Sharecast News) - Wall Street futures were in the green ahead of the bell on Wednesday as investors look ahead to the outcome of the Federal Reserve's two-day policy meeting.
As of 1215 GMT, Dow Jones futures were up 1.15%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.51% and 2.07% firmer, respectively.
The Dow closed 66.77 points lower on Tuesday as corporate earnings, geopolitical tensions and a downgrade in global growth forecasts were all in focus throughout the session.
Wednesday's primary focus will be the Federal Reserve's rate decision at 1900 GMT and press conference at 1930 GMT, with market participants hoping to gauge just when the central bank will raise interest rates and by how much. Economists expect the Fed to signal a rate hike as soon as March, with more policy tightening likely to follow in order to address high inflation.
Ahead of the announcement, the yield on the benchmark 10-year Treasury note was slightly higher at 1.79%.
Swissquote's Ipek Ozkardeskaya said: "It's probably soon time to chill for the Fed hawks, as the Fed hasn't got anything to gain in sending out hawkish messages today: slaughtered equity markets won't help them to get the inflation situation straight. On the contrary, a deep dive in the financial markets would only refrain the Fed from doing what it's got to do and worsen inflation.
"The hawkish fears include that the Fed could announce the end of the QE taper as soon as today, that it could hint at back-to-back rate hikes instead of one rate hike every quarter, that it could surprise with a 50bp point hike in March instead of a more likely 25bp raise, or it could even choose not to wait until March and hike the rates this week.
"Yet, these hawkish expectations are certainly a bit far stretched; the Fed can't trigger a financial crisis to fix the inflation problem. There is a greater chance we meet a confident, yet a comforting Fed at today's announcement. If the Fed wants to carry on with its hawkish plans, it needs to get the risk appetite under control."
On the macro front, mortgage applications fell 7.1% in the week ended 21 January, the sharpest decline in two months, with the refinancing index plunging 12.6% and the purchase index slipping 1.8%, according to the Mortgage Bankers Association.
Still to come, an advance reading of December's goods trade balance will be published at 1330 GMT, while new home sales for last month will follow at 1500 GMT and the Federal Reserve's interest rate decision will be announced at 1900 GMT.
In the corporate space, Whirlpool will report earnings later on in the day.
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