Nasdaq Index, Dow Jones, S&P 500 News: Futures Rise Ahead of Fed Decision

Highlights

• Major U.S. stocks gain ahead of Federal Reserve’s key decision.
• Fed’s rate policy outcome pivotal for market direction.
• Market steadiness observed, but cautious sentiment advised.
• VIX hits four-year low, signaling reduced market fear.

Positive Momentum in Major Averages

Investors are witnessing a fourth consecutive day of gains in major U.S. stock indices during Wednesday’s pre-market session.

At 10:07 GMT, the blue chip Dow Jones Industrial Average is trading 37016.00, up 49.00 or +0.13%. The benchmark S&P 500 Index is at 4703.25, up 6.00 or +0.13% and the tech-weighted Nasdaq-100 Index is trading 16601.25, up 25.75 or +0.16%.

The S&P and the Dow are both trading at their highest intraday levels since January 2022. The Nasdaq Composite is testing its highest level since April 2022. This upward trend in the market sets the stage for the Federal Reserve’s final policy announcement of the year at 19:00 GMT.

Anticipation of Federal Reserve’s Policy Decision

Traders are keenly awaiting the outcome of the Federal Reserve’s meeting, expecting the benchmark overnight borrowing rate to remain within the 5.25% to 5.5% range.

Market participants are especially focused on Fed Chair Jerome Powell’s remarks for any hints about future rate cuts. The CME FedWatch Tool indicates that markets anticipate rate reductions starting next spring, highlighting the importance of Powell’s commentary.

Fed’s Direction and Market Impact

The Federal Open Market Committee’s statement is anticipated to provide insights into the current state of employment, inflation, and economic growth. Additionally, the release of the Fed’s dot plot may offer clarity on the timing of future rate adjustments. Powell’s press conference is expected to be a key event, potentially influencing market movements.

U.S. Treasury Yields and Inflation Data

As the market awaits the Fed’s decision, U.S. Treasury yields have shown a slight decrease. The yield on the 10-year Treasury note fell to 4.1909%, and the 2-year Treasury yield dipped slightly to 4.7243%.

Investors are also processing recent CPI data, which showed a 0.1% monthly increase and a 3.1% annual rise in November, aligning with expectations. The core CPI, excluding food and energy, rose by 0.3% from the previous month.

Market Volatility and Upcoming Economic Indicators

The CBOE Market Volatility Index has reached a four-year low, indicating reduced market anxiety. However, analysts like BTIG’s Jonathan Krinsky caution against complacency, noting potential market dynamics reminiscent of early 2018. Investors are also awaiting the release of the November producer price index, with economists expecting a 0.1% rise, reflecting a shift from the previous month’s 0.5% decline.

Short-Term Forecast

Given the current market trends and anticipation surrounding the Federal Reserve’s policy decision, a cautiously bullish outlook seems appropriate. However, traders should remain vigilant for any unexpected shifts in the Fed’s stance or economic indicators.

Technical Analysis

The E-mini Nasdaq-100 Index is currently exhibiting a bullish sentiment. The current daily price of 16601.75, slightly above the previous close of 16575.50, indicates a positive momentum.

This price stands significantly above both the 200-day and 50-day moving averages, at 14996.16 and 15636.79 respectively, reinforcing the bullish outlook. The price is also above the main support level of 15717.25, which further strengthens the bullish scenario.

However, without clear minor resistance levels, it’s crucial to monitor any potential reversals or price consolidations.

The overall market sentiment, as indicated by these technical indicators, leans towards a bullish trend for the E-mini Nasdaq-100 Index.