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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 1, 2023.
Brendan Mcdermid | Reuters
U.S. stock futures ticked higher Wednesday as investors await the Federal Reserve’s latest policy decision.
Dow Jones Industrial Average futures rose by 50 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures climbed 0.1% each.
The central bank is widely anticipated to hold the benchmark overnight borrowing rate steady in the 5.25% to 5.5% range, but investors will also parse through Fed Chair Jerome Powell’s commentary for clues into how soon rate cuts can be expected. As it is, the CME FedWatch Tool shows markets are pricing in odds of rate cuts beginning next spring.
But that’s a scenario Powell may choose to push back on, especially as Treasury yields pull back on their own. The 10-year Treasury yield has fallen to 4.2% after topping 5% in October.
“He may hint that’s doing some of the prospective easing,” Liz Ann Sonders, chief investment strategist at Charles Schwab, said on CNBC’s “Closing Bell” on Tuesday.
“That’s, to me, what I’m going to be focused on, is whether he sort of does the opposite of what he did when he said that the move up in yields had done some of the tightening for the Fed,” Sonders added.
Investors will also keep an eye on the November producer price index, set for release 8:30 a.m. ET on Wednesday ahead of the Fed decision. Economists polled by Dow Jones expect a rise of 0.1%, up from a 0.5% decline the prior month. Excluding food and energy, it’s anticipated to have risen 0.2%, up from a flat reading the previous month.
Investors are coming off a fourth straight positive session. Both The Dow and S&P 500 hit their highest intraday levels since January 2022. The Nasdaq Composite reached its highest level since April 2022.
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