U.S.Futures Mixed As Market Waits for Fed Guidance, SLR Ruling

By Peter Nurse   

Investing.com - U.S. stocks are seen mixed in tight trading ranges Wednesday, with the Federal Reserve set to conclude its two-day meeting later in the session.

At 7:05 AM ET (1205 GMT), the Dow Futures contract was up 20 points, or 0.1%, while S&P 500 Futures traded 4 points, or 0.1%, lower, and Nasdaq 100 Futures dropped 60 points, or 0.5%.

The Dow Jones Industrial Average closed 0.4% lower on Tuesday, ending a five-day win streak, but still on course to record its best month since November. The S&P 500 was down 0.2%, after hitting a record intraday high, while the Nasdaq Composite ended up 0.1%.

Market participants will be focusing Wednesday on the outcome of the Federal Reserve’s latest two-day meeting, its second this calendar year.

The central bank is expected to keep rates unchanged and its $120 billion pace of monthly bond purchases on hold. Of more interest will be its updated economic predictions and its predicted path of interest rate movements going forward. In addition, the Fed will likely say whether it's extending a key exemption on bank capital requirements that could have far-reaching consequences for the bond market.

“Markets already price in almost one full rate hike during 2022, and we doubt that the dot plot will look more hawkish than that. The market pricing for the next 12 months is still very muted,” said analysts at Nordea, in a research note.

Rises in Treasury yields--caused largely by bets the central bank will have no option but to step up bond buying as the pace of inflation is set to accelerate--have been a key factor influencing the movement in stocks in recent weeks, specifically the tech sector, with higher rates forcing a shift into value stocks from growth.

The yield on the benchmark 10-year Treasury yield was last seen over 1.6%, not far from the highest level in a year it hit last week.

As well as the news from the Fed, there will be February data on housing starts and building permits, as well as weekly numbers on mortgage rates and refinancing.

In the corporate sector, Uber (NYSE:UBER) is likely to be in the spotlight after the ride-hailing firm agreed to treat its U.K. drivers as employees after losing a court case.

Oil prices weakened Wednesday, after the International Energy Agency warned that global demand won’t return to pre-pandemic levels until 2023, and growth will be subdued thereafter.

Traders will carefully study U.S. inventories data from the Energy Information Administration, to be released later in the session, after the American Petroleum Institute detailed late Tuesday a surprise fall in crude stocks of 1 million barrels last week.

U.S. crude futures traded 1.1% lower at $64.06 a barrel, while the Brent contract fell 1.4% to $67.47. 

Elsewhere, gold futures fell 0.1% to $1,730.35/oz, while EUR/USD traded 0.1% higher at 1.1907.

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