U.S. Stocks May Lack Direction Ahead Of Fed Decision

Following a strong start to the week, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures up by just 0.1 percent.

Traders may be reluctant to make significant moves ahead of the Federal Reserve’s highly anticipated monetary policy announcement this afternoon.

While the Fed is widely expected to leave interest rates unchanged, traders will pay close attention to the accompanying statement for clues about the outlook for rates.

CME Group’s FedWatch Tool is currently indicating a 90.8 percent chance the Fed will leave rates unchanged today but a 57.8 percent chance of another quarter point rate hike in July.

Potentially generating some optimism about the outlook for rates, the Labor Department released a report showing producer prices in the U.S. decreased by more than expected in the month of May.

The Labor Department said its producer price index for final demand fell by 0.3 percent in May after inching up by 0.2 percent in April. Economists had expected producer prices to edge down by 0.1 percent.

The report also showed the annual rate of producer price growth slowed to 1.1 percent in May from 2.3 percent in April. The rate of growth was expected to decelerate to 1.5 percent.

A separate report released by the Labor Department on Tuesday showed the annual rate of consumer price growth slowed to a two-year low in May.

Stocks moved mostly higher during trading on Tuesday, extending the upward move seen over the course of Monday’s session. With the continued advance, the Nasdaq and the S&P 500 once again reached their best closing levels in over a year, while the Dow set a four-month closing high.

The major averages finished the day off their highs of the session but still firmly positive. The Nasdaq advanced 111.40 points or 0.8 percent to 13,573.32, the S&P 500 climbed 30.08 points or 0.7 percent to 4,369.01 and the Dow rose 145.79 points or 0.4 percent to 34,212.12.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index jumped by 1.5 percent, while Hong Kong’s Hang Seng Index slid by 0.6 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index has advanced by 0.8 percent, the German DAX Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

In commodities trading, crude oil futures are climbing $0.74 to $70.16 a barrel after surging $2.30 to $69.42 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,964.30, up $5.70 compared to the previous session’s close of $1,958.60. On Tuesday, gold fell $11.10.

On the currency front, the U.S. dollar is trading at 139.67 yen compared to the 140.22 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0825 compared to yesterday’s $1.0793.