Stock futures fell on Wednesday as investors braced for the Fed’s latest rate decision at the end of its policy meeting.
Futures linked to the Dow Jones Industrial Average fell 17 points, or 0.05%. S&P 500 futures and Nasdaq 100 futures were flat.
Stock futures fell to session lows after better-than-expected private employment data for October.
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.
Earnings season continues with strong results from CVS Health. Advanced Micro Devices rose despite missing both top and bottom lines.