Wall St poised for higher open ahead of Fed meeting outcome

Article content

Wall Street’s major indexes are set to open higher on Wednesday after selling off in the previous session, as investors await more economic data ahead of the outcome of the Federal Reserve’s policy meeting later in the day.

Major US stock indexes fell more than 1% on Tuesday as regional bank stocks fell on renewed concerns about the financial system and as investors tried to gauge how long the Federal Reserve might need to raise interest rates.

Article content

Regional lenders such as PacWest Bancorp and Western Alliance Bank extended losses in pre-market trading Wednesday, with their shares down 2% and 1%, respectively.

Article content

said Jason Braid, head of investment strategy and research at Glenmed.

While the Fed is widely expected to raise interest rates by 25 basis points, investors’ focus will be on the cues if further increases are on the cards given that inflation remains above the US central bank’s target of 2%.

“The Fed may want to provide as little guidance as possible, while keeping the door open for pauses or even an additional hike,” said Saxo Bank analysts.

Major global central banks have embarked on a campaign of aggressive rate hikes to tackle flat inflation, with the Fed already raising benchmark interest rates nine times by 475 basis points to a range of 4.75%-5.00% since March 2022.

Article content

Article content

On the data front, the ADP National Employment Report showed that US private employers boosted hiring in April, but there were signs that the labor market was slowing amid rising interest rates.

Surveys of service sector activity in the US are also scheduled for release in April after the market opens.

Meanwhile, top Republican senators on Tuesday called on President Joe Biden to accept their party’s debt-ceiling package or make a counter-offer, while a top Democrat said the Senate could try to push a “clean” debt-ceiling hike next week.

At 8:27 a.m. ET, the Dow e-minis were up 44 points, or 0.13%, the S&P 500 e-minis were up 9.5 points, or 0.23%, and the Nasdaq 100 e-minis were up 30.75 points, or 0.23%.

Analysts expect quarterly earnings for S&P 500 companies to fall 1.4% from a year earlier, according to IBES data from Refinitiv, compared with a 5.1% drop expected at the start of April.

Article content

Advanced Micro Devices fell 7.3% after the chipmaker forecast lower-than-expected quarterly sales due to a weak PC market, which pushed rival Intel Corp up 3.1%.

Eli Lilly and Co gained 4.9% as an experimental Alzheimer’s drug developed by the company slowed cognitive decline by 35% in a closely monitored late-stage trial. Rival Biogen Inc fell 1.4%.

Estee Lauder Cos Inc stock fell 15% as the MAC lipstick maker forecast a larger decline in full-year sales and earnings on the back of a slower-than-expected recovery in travel retail in Asia and key China market.

Kraft Heinz Co rose 2.8% after the Jell-O manufacturer raised its full-year profit forecast after beating first-quarter forecasts, while CVS Health Corp fell 2.4% after cutting its annual profit forecast.

(Reporting by Anika Biswas and Sruthi Shankar in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Shonak Dasgupta)