U.S. stock index futures edged higher early Wednesday as traders waited on the Federal Reserve's rate decision, with fed funds futures pricing a nearly 70% chance the central bank holds at 3.5% to 3.75%. West Texas Intermediate crude added about 3.7% to around $82 a barrel after U.S. Central Command said it intercepted Iranian ballistic missiles aimed at American forces in the Middle East.
S&P 500 futures gained 0.18% early Wednesday, while Nasdaq 100 futures dipped 0.11%, reversing earlier gains. Dow Jones Industrial Average futures were up 35 points and were last seen hovering just above the flatline.
Traders price a Fed hold at 3.5% to 3.75%
Fed funds futures traders are pricing in a nearly 70% likelihood that the central bank holds rates steady at the current target range of 3.5% to 3.75%, according to CME's FedWatch tool. Chairman Kevin Warsh speaks at a press conference on Wednesday afternoon.
Treasury yields inched up ahead of the decision. The 10-year yield rose over 1 basis point to 4.614%, while the 2-year note, which more closely tracks short-term Fed policy, was up over 1 basis point at 4.291%. Markets are instead pricing a 76% chance of a September hike, according to CME Group's FedWatch tool.
Julia Hermann, global market strategist at New York Life Investment Management, said: "We continue to believe markets are placing too much weight on inflation risk". She added that a more hawkish communication stance would likely test the day's narrow market leadership more than the broader market.
Oil climbs to about $82 after intercepted missile attack
West Texas Intermediate crude futures advanced about 3.7% to trade at around $82 a barrel after U.S. Central Command said Islamic Revolutionary Guard Corps forces launched multiple ballistic missiles from Iran in an attempted surprise attack on U.S. forces based in the Middle East. The missiles were successfully intercepted, Centcom said.
Chip selling runs from Seoul to the Nasdaq
Traders sent the Dow surging more than 500 points on Tuesday as they geared up for the decision, its third straight winning day, with the recent decline in oil prices providing upward momentum. But the Nasdaq Composite ended in the red for the fifth consecutive session, dragged down by struggling chip stocks.
The VanEck Semiconductor ETF dropped 3.5% in its fourth straight negative session on Tuesday, bringing the fund's one-week loss to more than 9%.
A wider sell-off in index heavyweights hit Asia, where South Korea's Kospi closed 6% lower and Japan's Nikkei 225 dropped 1.49%. Mainland China's CSI 300 ended 0.67% higher, and Australia's S&P/ASX 200 rose over 1%.
SK Hynix trimmed losses to close 9.6% lower in Seoul, after falling 15% earlier in the session. Its U.S.-listed shares were down almost 2.1% in premarket trading.
Procter & Gamble and Microsoft headline Wednesday's earnings
Before the Fed decision, investors will monitor earnings from Procter & Gamble and Humana coming before the bell. Results from Microsoft and Meta Platforms, as well as chipmaker Qualcomm, will be out in the afternoon.
Source: CNBC
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