US pre-open: Stocks mixed ahead of FOMC interest rate decision

20th Mar 2024 11:39

(Sharecast News) - Wall Street futures were mixed ahead of the bell on Wednesday as investors awaited the outcome of the Federal Reserve's two-day monetary policy meeting.

As of 1300 GMT, Dow Jones and S&P 500 futures had the indices opening 0.15% and 0.10% lower, respectively, while Nasdaq Composite futures were up 0.09% in pre-market trading.

The Dow closed 320.33 points higher on Tuesday despite an abundance of caution in the air as all eyes turned to the central bank.

Wednesday's primary focus will be the Federal Reserve's interest rate decision and press conference, scheduled for 1800 GMT and 1830 GMT, respectively, with the Fed generally expected to keep interest rates unchanged. Market participants will thumb over the central bank's dot plot for any hints as to the number and timing of future rate cuts, with many anticipating the Fed will start to lower rates in June. However, many traders have become fearful that a recent spate of hotter-than-expected inflation figures may very well result in even fewer cuts than markets have factored in.

Trade Nation's David Morrison said: "Yesterday's gains were another indication that the current path of least resistance for stocks remains upwards. Whether this continues after this evening's rate announcement, statement, Summary of Economic Projections and Fed Chair Powell's press conference remains to be seen. The market is confidently predicting that the Fed will continue to keep interest rates unchanged. If so, this will be the fifth successive 'pause' meeting. The Fed last hiked rates in July 2023, and followed this in December by suggesting that the next move would be a cut, for which we're still waiting. Key to the Fed's thoughts on this will be the FOMC's 'Dot Plot' which shows members forecasts for the Fed Funds rate for this year and beyond. Analysts will pounce on this to see how much it may differ from the last one in December, both in terms of the timing of the first rate cut, and also where the Fed Funds rate may be by the end of this year.

"Will FOMC members force yet another market revaluation? If so, it's likely to be less dovish than current expectations, and that could trigger a sell-off in risk. Analysts will also be listening out for any change to the Fed's current balance sheet reduction programme. If this were to be cut back or halted, then it should offer bonds and equities some support."

Elsewhere on the macro front, mortgage applications fell by 1.6% in the week ended 15 March, according to the Mortgage Bankers Association, taking a bit out of the previous week's 7.1% increase. Applications to purchase a new home fell by 1.2%, while those to refinance a home fell by 2.5%.

No major corporate earnings were slated for release on Wednesday.

Reporting by Iain Gilbert at Sharecast.com