Dow Jones Futures Rise as Oil Prices, Treasury Yields Fall Ahead of Expected Fed Rate Hike

Dow Jones, S&P 500 and Nasdaq-100 futures rose Wednesday morning as traders positioned for a likely Federal Reserve interest-rate increase and Fed Chair Kevin Warsh's afternoon press conference. Oil prices and the 10-year Treasury yield pulled back at the same time, while Intel and SK Hynix jumped on a report the two chipmakers are discussing U.S. manufacturing plans.

Dow Jones Industrial Average futures rose 0.2% ahead of Wednesday's open, while S&P 500 futures gained 0.3% and Nasdaq-100 futures moved up 0.5% in early trading. The moves followed a weak session, when the Dow declined 0.6% Tuesday and the Russell 2000 hit a fresh three-month low.

Fed decision, Warsh outlook in focus

The Fed's policy meeting concludes Wednesday afternoon, with odds of a rate hike at 92% for the 2 p.m. ET announcement, according to CME Group's FedWatch tool. Odds of another quarter-point hike before year-end stand at 77%. Fed policymakers will also release their quarterly "dot plot" of individual rate forecasts.

Warsh does not typically offer forward guidance, but his 2:30 p.m. ET press conference could still hint at the Fed's next moves. According to the second Investor's Business Daily report, long-term yields could fall if a hike gives the Warsh-led Fed added credibility with bond investors.

Oil, yields retreat before the announcement

West Texas Intermediate crude futures slipped nearly 2% to around $103.80 a barrel, while the 10-year Treasury yield eased to 4.98%. A separate IBD report put crude below $103.50 a barrel and the 10-year yield at 4.97% in a later premarket update, a pullback from Tuesday's 19-year intraday high of 5.02%.

Inside the Dow, Caterpillar and Nvidia each climbed nearly 1%, while Chevron declined more than 1% as oil prices fell.

Intel, SK Hynix jump on chip report

Intel and SK Hynix rallied more than 3% apiece in premarket trading after Reuters reported the two companies are in talks for SK Hynix to manufacture memory chips in the U.S. for the first time. SK Hynix could lease part of Intel's planned Ohio chipmaking facility or form a joint venture, though no decisions have been made, sources told Reuters.

Shares of Intel were looking to regain the 50-day moving average but remained about 31% off their 52-week high. SK Hynix stock, meanwhile, traded near the 178.43 cup-with-handle entry it broke out past last week.

Sources: Investor's Business Daily, Investor's Business Daily

Register Now

Trading involves risk.