Dow Futures Rise 105 Pts; Fed Interest Rate Decision Looms Large
2022.05.04 14:16
By Peter Nurse
Investing.com — U.S. stocks are seen opening marginally higher Wednesday ahead of the latest Federal Reserve policy-setting meeting, a gathering which is likely to set the future tone for financial markets.
At 7 AM ET (1100 GMT), the Dow Futures contract was up 105 points, or 0.3%, S&P 500 Futures traded 15 points, or 0.4%, higher and Nasdaq 100 Futures climbed 40 points, or 0.3%.
The U.S. central bank concludes its two-day meeting later Wednesday, and is expected to raise interest rates by 50 basis points while signaling it is on track to lift them to around 2.5%, from the current 0.50%, by the end of the year.
The policy statement is due to be released at 2 PM ET (1800 GMT), and Fed Chair Jerome Powell’s press conference 30 minutes later will also be carefully studied as it’s not clear the expected path will be enough to tame inflation, which is running at levels not seen in four decades.
The idea that increasing rates by just 2% to 3% to slow inflation “is really unlikely — I think they’re going to have to raise interest rates to 4% or 5% to bring inflation down to 2.5% or 3%,” former International Monetary Fund chief economist Kenneth Rogoff said in an interview on Bloomberg Television on Tuesday.
Investors will also keep an eye on the monthly ADP private payrolls release, due at 8.15 AM EDT, ahead of Friday’s key jobs report for April which should show how the employment market is holding up.
Data released on Tuesday showed there are 11.5 million openings in the U.S. but unemployment is at multi-decade lows.
In corporate news, Lyft (NASDAQ:LYFT) stock traded sharply lower premarket after the ride-sharing company detailed the additional expenditure needed to boost driver numbers.
Airbnb (NASDAQ:ABNB) stock climbed premarket after the housing rental company projected strong second-quarter revenue, betting on a rebound in summer travel. Coffee chain Starbucks (NASDAQ:SBUX) rose after topping revenue estimates, while Advanced Micro Devices (NASDAQ:AMD) gained after the semiconductor saw massive sales growth in the quarter.
The earnings season continues, with results from pharmacy firm CVS Health (NYSE:CVS) due before the bell, and ride-hailing company Uber (NYSE:UBER), fast food company Yum! Brands (NYSE:YUM) and travel booking firm Booking Holdings (NASDAQ:BKNG) after the close
Oil prices strengthened Wednesday after the European Commission proposed a complete import ban on all Russian oil, coming into force by the end of the year.
Industry data from industry body American Petroleum Institute, released on Tuesday, showed U.S. crude stocks fell by 3.5 million barrels last week, signaling a tightness of supply in the world’s largest oil consumer.
Investors now await official crude oil supply data from the Energy Information Administration, due later in the session.
At 7 AM ET, U.S. crude futures traded 3.9% higher at $106.45 a barrel, while the Brent contract rose 3.9% to $109.07.
Additionally, gold futures edged lower to $1,870.10/oz, while EUR/USD inched higher to 1.0524.
