Wall Street futures indicated a modest increase before the market opens on Wednesday, as traders eagerly awaited what is projected to be the Federal Reserve's first interest rate cut in over four years. This pivotal announcement from the US central bank is set to take place at 2 pm ET in Washington, followed by a press conference at 2:30 pm featuring Chair Jerome Powell. As speculation mounts, there is currently a 65% probability of a 50-basis-point cut, contrasted with a 35% probability of a 25-basis-point reduction, as indicated by the CME FedWatch tool.
Investors are keenly focused not only on the potential rate cut but also on the Fed's revised outlook concerning interest rates and inflation. In the premarket futures, the S&P 500 index saw a slight increase of 0.1%, while the Nasdaq climbed by 0.2%, and the Dow Jones also registered a modest uptick of 0.2%.
Such movements suggest that the market is leaning towards anticipating a more substantial rate cut. Moreover, the Atlanta Fed’s GDPNow forecasting tool, which was updated on Tuesday in response to recent retail sales data, now projects a third-quarter growth rate for the gross domestic product (GDP) of 3% annualized, underscoring a resilient and growing economy. Asian markets exhibited varied results overnight; Hong Kong remained closed due to a public holiday, while both Shanghai and Tokyo reported gains.
In contrast, European exchanges reflected a more conservative outlook, tracking moderately lower by midday. Investors are also looking ahead to earnings reports, with General Mills, Inc. (GIS) among the companies set to report their earnings before the opening bell. On the economic calendar today, alongside the much-anticipated Fed announcement, key indicators such as housing starts and permits will be released at 8:30 am ET, followed by the Atlanta Fed's Business Inflation Expectations report for September at 10 am. Additionally, the weekly EIA petroleum status update is scheduled for 10:30 am. In the latest premarket trading, Bitcoin was priced at $59,658, while West Texas Intermediate crude oil saw a decrease, settling at $69.14.
The yield on 10-year US Treasuries stood at 3.66%, and spot gold was trading at $2,577 per ounce. As we continue to monitor the economic landscape, market participants remain vigilant in analyzing trends and indicators, particularly in light of the forthcoming Federal Reserve decisions and their potential implications for the broader financial environment. Investors are advised to keep an eye on these developments, as they will likely play a significant role in shaping market dynamics in the days to come.
With the Fed's policy decisions historically influencing market sentiment and economic conditions, today's announcements could create ripples across various asset classes..