Nasdaq Index, Dow Jones, S&P 500 News: Fed Decision Day Sparks Early Weakness

Early Weakness

U.S. stock index futures are putting in a mixed performance shortly before the cash market opening on Wednesday, following a day of gains in the major averages. Investors are closely monitoring the upcoming Federal Reserve policy decision, impacting market sentiments.

At 11:08 GMT, Dow futures are trading 39510.00, down 29.00 or -0.07%. S&P 500 Index futures are at 5240.50, down 1.25 or -0.02% and Nasdaq-100 Index futures are trading 18289.00, up 19.00 or +0.10%.

Stock Market Movements

The Dow Jones saw its best day since February 22 on Tuesday, climbing 0.8%, while the S&P 500 and Nasdaq Composite rose approximately 0.6% and 0.4%, respectively. Tech stocks, particularly in the semiconductor sector, showed signs of slowing, as highlighted by the 0.2% decline in the VanEck Semiconductor ETF. Notably, Chipotle Mexican Grill’s stock surged post-announcement of a 50-for-1 stock split.

Bitcoin’s Decline

Bitcoin’s recent sell-off continued, momentarily dipping below $61,000 before stabilizing around $62,900. This downward trend follows its peak at nearly $73,800 last week. Contributing factors include profit-taking after a significant rally and a slight withdrawal from Bitcoin ETFs, which saw outflows for the first time since early March. Analysts suggest a potential further drop to the $50,000 – $52,000 range if the decline continues.

Treasurys and Fed’s Interest Rate Decision

U.S. Treasury yields were lower as the market anticipates the Federal Reserve’s interest rate decision. Despite expectations for unchanged rates, investors seek clarity on future rate cuts and inflation outlooks. Recent economic data suggest inflation may be more persistent, adding to the uncertainty surrounding the interest rate trajectory.

Federal Reserve Outlook

The Federal Reserve is expected to maintain interest rates, with attention focused on the dot plot for insights into future rate adjustments. Concerns arise from recent inflation reports, potentially leading to fewer rate cuts than initially expected. Market resilience hinges on the sustainability of economic growth and the Fed’s response to evolving economic conditions.

Market Forecast

The market appears cautiously optimistic, awaiting the Federal Reserve’s guidance. If the Fed maintains a steady course with no surprises, we could see a bullish short-term outlook for U.S. stock index futures. However, any indication of fewer rate cuts or persistent inflation concerns could tilt the market towards a bearish stance. Investors should monitor the Fed’s commentary for indications of future policy directions.

Technical Analysis

E-mini Nasdaq-100 Index futures are edging higher on Wednesday. The market is in a position to test a short-term retracement zone at 18348.75 to 18429.58. Trader reaction to a test of this area is likely to set the tone for the week.

On the downside, the major support remains the uptrending 50-day moving average at 17050.57. This intermediate trend indicator has been guiding the tech-heavy index higher since November 3.