NASDAQ 100, Dow Jones, S&P 500: Investors Anticipate Fed’s Announcement, Powell’s Remarks on Economy

Highlights

• US stock index futures trading mixed ahead of Fed’s policy decision.
• Investors focus on Jerome Powell’s remarks and economic insights.
• Market optimism fueled by low inflation and ETFs reaching new highs.

Overview

US stock index futures are mixed in early Wednesday trading. Traders are awaiting the Federal Reserve’s policy decision and Chair Jerome Powell’s remarks. The market eagerly anticipated valuable insights on the economy and the central bank’s future.

At 08:48 GMT, Dow futures are trading 34497.00, down 34.00 or -0.10%. S&P 500 Index futures are at 4426.75, up 10.00 or +0.23% and Nasdaq futures are trading 15145.75, up 46.75 or +0.31%.

Markets Expect Fed to Pause

Traders are anticipating a 90% likelihood that the Fed will maintain rates at the current target range of 5% to 5.25%. This potential decision would mark a pause in rate hikes after a string of ten consecutive increases. This would offer some respite for investors.

PPI on Tap after Softer CPI Data

Adding to the mix, the release of May’s producer price index is scheduled for Wednesday morning at 12:30 GMT. Economists surveyed by Dow Jones anticipate a marginal decline of 0.1%. The previous day’s consumer price index report for May, which revealed the lowest annual increase in over two years, boosted investor optimism that the Fed might refrain from raising interest rates.

S&P 500, NASDAQ Hit Multi-Month Highs

The market response to this positive sentiment was evident on Tuesday, as the 30-stock Dow Jones Industrial Average climbed nearly 146 points, or 0.4%. The broader market indices, the S&P 500 and the Nasdaq Composite, also experienced gains of 0.7% and 0.8% respectively. Notably, both the S&P 500 and Nasdaq reached their highest levels since April of the previous year during the trading session.

Powell’s Remarks Will Set the Tone

Bolstering investor confidence was the CPI report, which indicated a continued decrease in inflation. As a result, there is a potential for the Fed to “skip” a rate announcement today. Nevertheless, the outcome heavily relies on the Federal Open Market Committee (FOMC) statement scheduled for later in the day. Moreover, traders are eagerly anticipating Jerome Powell’s responses during the subsequent press conference.

Several ETFs Hit 52 Week Highs

In parallel developments, several exchange-traded funds (ETFs) have reached new highs alongside the S&P 500 and the Nasdaq Composite. Technology-focused ETFs, including the iShares Semiconductor ETF (SOXX), the VanEck Semiconductor ETF (SMH), the Global X Robotics & Artificial Intelligence ETF (BOTZ), the WisdomTree Artificial Intelligence & Innovation Fund (WTAI), and the ROBO Global Robotics & Automation Index ETF (ROBO), all achieved fresh 52-week highs. Additionally, the Invesco QQQ Trust (QQQ) and its underlying index, the Nasdaq-100, also reached new 52-week highs.

This surge in ETF performance extends beyond the technology sector, with other sectors such as industrials and home construction showing strength. The Industrial Select Sector SPDR Fund (XLI), SPDR S&P Homebuilders ETF (XHB), iShares U.S. Home Construction ETF (ITB), and Vanguard Industrials ETF (VIS) all reached their highest levels in a year, indicating a potential broadening of the market rally.

Short-Term Outlook:  Bullish Bias Ahead of Fed Policy Decision

As the market awaits the Fed’s policy decision and Powell’s commentary, investors will closely analyze these developments and the potential impact on market dynamics.