US pre-open: Futures mixed ahead of Fed decision
By Iain Gilbert
Date: Wednesday 22 Mar 2023
(Sharecast News) - Wall Street futures were pointing to mixed open ahead of the bell on Wednesday as investors patiently awaited the outcome of the Federal Reserve's two-day policy meeting.
As of 1230 GMT, Dow Jones futures were up 0.05%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.02% and 0.12% weaker, respectively.
The Dow closed 316.02 points higher on Tuesday, building on gains recorded in the previous session amid hopes that recent chaos in the banking sector may have finally been stifled.
Wednesday's primary focus will be on the Fed, with traders waiting to find out just what the central bank's next move will be in its battle against rampant inflation. The Federal Reserve will reveal its latest decision at 1800 GMT, with a press conference to discuss set to follow at 1830 GMT. Traders expect to see a 0.25% interest rate hike and a pledge to stay committed to its tightening efforts.
Markets.com's Neil Wilson said: "The Federal Reserve faces a dilemma today - keep the hammer down on inflation or bow to financial stability concerns. It will have reservations about hiking for sure in the wake of the SVB-Credit Suisse debacles, but it's got the inflation dragon to slay and should continue on the path. I think the last thing the Fed wants right now is talk of cuts...but the events of the last couple of weeks may just be doing the job for the Fed.
"The Fed will need to stay the course - every time it lifts it foot off the brakes the inflation clown car runs away from it. Nomura says cut, with some banks saying the Fed will pause - but most say the Fed will go for a 25bps hike. Market pricing is a more assured - 87% chance of 25bps, 13% chance of a pause. Looking through a wider lens, we are in a new phase of the cycle where central banks are trying to explicitly separate monetary policy from financial stability policy, which is tricky circle to square."
Elsewhere on the macro front, mortgage applications rose 3% in the week ended 17 March for a third consecutive weekly increase, according to the Mortgage Bankers Association of America. Applications to refinance a home loan increased 4.9% and applications to purchase a home rose 2.2% as borrowing costs hit their lowest level in almost a month after turmoil in the banking sector sent Treasury yields lower.
In the corporate space, meme stock favourite Game Stop delivered earnings per share of $0.16 in its fiscal fourth quarter, a marked improvement on the $0.47 loss recorded at the same time a year earlier, while revenues beat estimates by £150.0m to come in at £2.23bn.
Nike also reported its latest set of quarterly earnings, with the shoemaker posting earnings of $0.79 per share, well above consensus estimates for a reading of $0.55, but also warned that it had experienced a 3.3-point fall in gross margins to 43.3% due to markdowns and promotions used to liquidate its inventory.
Reporting by Iain Gilbert at Sharecast.com
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