Futures Pointing To Modestly Higher Open Ahead Of Fed Announcement

After ending the previous session little changed, stocks may move to the upside in early trading on Wednesday. The major index futures are currently pointing to a modestly higher open for the markets, with the S&P 500 futures up by 0.2 percent.

Traders may be reluctant to make significant moves early in the session ahead of the Federal Reserve’s monetary policy decision this afternoon.

The Fed is due to announce its decision on interest rates at 2 pm ET, followed by Fed Chair Jerome Powell’s post-meeting press conference at 2:30 pm ET.

While the Fed is almost universally expected to lower rates, there continues to be some debate about the size of the rate cut.

CME Group’s FedWatch Tool is currently indicating a 65.0 percent chance of a half-point rate cut and a 35.0 percent chance of a quarter-point rate cut.

However, John Lynch, Chief Investment Officer for Comerica Wealth Management, said, “Though consensus is leaning toward a 50 basis point move, we look for the Fed to cut by 25 basis points today.”

“Inflation growth is not yet at the Fed’s target for price stability, the unemployment rate still hovers around 4.0%, and federal deficit spending continues to surge,” he added. “In this environment, we believe the more prudent policy action is to withstand market pressure and proceed slowly with a 1/4 point mover lower today.”

In U.S. economic news, a report released by the Commerce Department showed a substantial rebound by new residential construction in the U.S. in the month of August.

After moving mostly higher early in the session, stocks gave back ground over the course of the trading day on Tuesday. The Dow and the S&P 500 reached new record intraday highs in early trading but subsequently pulled back near the unchanged line.

The major averages ended the day narrowly mixed. While the Dow edged down 15.90 points or less than a tenth of a percent to 41,606.18, the S&P 500 inched up 1.49 points or less than a tenth of a percent to 5,634.58 and the Nasdaq rose 35.93 points or 0.2 percent to 17,628.06.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index both climbed by 0.5 percent.

Meanwhile, the major European markets have moved to the downside on the day. While the U.K.’s FTSE 100 Index is down by 0.6 percent, the French CAC 40 Index is down by 0.4 percent and the German DAX Index is just below the unchanged line.

In commodities trading, crude oil futures are falling $0.62 to $70.57 a barrel after jumping $1.10 to $71.19 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,601, up $8.60 compared to the previous session’s close of $2,592.40. On Tuesday, gold slid $16.50.

On the currency front, the U.S. dollar is trading at 141.86 yen compared to the 142.41 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1118 compared to yesterday’s $1.1114.