Futures edge lower on caution ahead of Fed rate decision
2023.03.22 05:58
© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2023. REUTERS/Brendan McDermid
(Reuters) – U.S. stock index futures fell on Wednesday in the run-up to a crucial interest rate decision by the Federal Reserve, which is widely expected to raise rates by a quarter percentage point despite the recent turmoil in the banking sector.
The Fed’s two-day monetary policy meeting will end at 2 p.m. ET (1800 GMT) on Wednesday. The expected rate hike of 25 basis points is a turnaround from the steep 50 basis points rate rise anticipated before the recent banking turmoil, triggered by the recent collapse of two regional banks.
Markets will also be watching out for a news conference by Fed Chair Jerome Powell following the interest rate decision, looking for cues about the central bank’s future path in his commentary.
“There will be considerable psychology at work, as a pause at this stage could inflame worries by being taken to indicate that policymakers are rattled,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“Instead, they (the Fed) may prefer to shore up confidence by keeping to a pre-set path for now, particularly given that stability has returned.”
Wall Street’s main indexes notched gains for the past two straight sessions, after the rescue of Credit Suisse as well as measures by central banks to boost liquidity helped soothe some worries about risks to other banks.
However, a scramble by troubled regional U.S. lender First Republic Bank (NYSE:) to secure a capital infusion has kept alive some fears about the banking sector.
Shares of First Republic edged 3.0% higher in premarket trade, with a Bloomberg News report on Tuesday stating the bank’s rescue could rely on backing from the U.S. government to facilitate a deal.
Shares of its peers PacWest Bancorp and Western Alliance (NYSE:) Bancorp inched about 1% higher in choppy trading.
U.S. Treasury yields inched lower amid the cautious mood, with that on the two-year note last at 4.13%.
At 5:00 a.m. ET, were down 57 points, or 0.17%, were down 9.5 points, or 0.24%, and were down 54.75 points, or 0.43%.
Among other stocks, shares of Nike Inc (NYSE:) fell 1.6% in premarket trade after the sports apparel maker raised its full-year revenue outlook on Tuesday but warned of margin pressures.
Shares of GameStop Corp (NYSE:) jumped 38.9% after the company posted a surprise profit for the fourth quarter, helped by lower costs and job cuts.
