U.S. stock-index futures Wednesday morning edged lower ahead of an eagerly anticipated Federal Reserve decision that could help guide investor sentiment, amid curious moves in financial markets and uncertainties surrounding Middle East politics and international tariff relationships.
How are major benchmarks faring?
Futures for the Dow Jones Industrial Average YMU19, -0.14% gave up 30 points, or 0.1%, at 27,080, those for the S&P 500 ESU19, -0.19% were off 4.65 points, or 0.2%, at 3,003.25, while Nasdaq-100 futures NQU19, -0.27% fell 14.25 points to reach 7,899.25, a decline of 0.2%.
On Tuesday, the Dow DJIA, +0.13% gained 33.98 points, or 0.1%, to close at 27,110.80, while the S&P 500 SPX, +0.26% rose 7.74 points, or 0.3%, to end at 3,005.70, supported by gains in real estate, up 1.3% and utilities, up 0.9%—sectors considered defensive.
The Nasdaq Composite Index COMP, +0.40% advanced 32.47 points, or 0.4%, to 8,186.02.
What’s driving the market?
All eyes are on the Fed ahead of its afternoon policy statement, but investors have been watching the central bank over the past few days for its recent and unexpected intervention in an important area of financial markets.
Read: 3 things to watch as the Fed meets on interest rates Wednesday
The Fed on Tuesday carried out its first overnight repurchase auction in a decade to bring the benchmark federal-funds rate, which jumped to a high around 9%, back into a desired 2%-2.25% range. The New York Federal Reserve said late Tuesday that it would carry out a second overnight repo operation on Wednesday ($75 billion in repos), after Tuesday’s $53 billion funding.
The actions come ahead of an important policy decision by the rate-setting Federal Open Market Committee at 2 p.m. Eastern Wednesday and raises some questions about the state of Wall Street’s financial plumbing, as the central bank is expected to reduce rates by a quarter of a percentage point and communicate its future monetary-policy plans to stave off the harmful effects of a Sino-American trade war and a creeping global economic slowdown.
Fed Chairman Jerome Powell is slated to host a news conference a half-hour after the policy makers’s decision is released.
“The Fed are tipped to lower rates, but given the US economy is broadly in good health, there is an argument the central bank should hold fire on lowering interest rates,” wrote David Madden, market analyst at CMC Markets UK, in a daily research note. “The US employment rate is close to a 50-year low, core [consumer-price index, a key inflation measure] is rising, plus wages are robust, so the Fed have justification for keeping rates on hold,” he said.
Investors also have been keyed in on Middle East developments after Saudi Arabia’s key oil-processing hub was momentarily hobbled over the weekend by reported drone and missile attacks.
The attack initially caused the Brent price BRNX19, -0.54%, the international benchmark, to rise 15% on Monday, the biggest single-session rise on record dating back to 1988, but U.S. benchmark crude, West Texas Intermediate grade CLV19, -0.69% traded on the New York Mercantile Exchange, and Brent oil have been giving up much of their historic gains as Riyadh has signaled that its plans will come back on line sooner than originally feared.
Anxieties around the attacks in the Arabian Peninsula have elevated tensions between the U.S. and Iran, where the drones and missiles are believed to have originated, but markets likely will focus on central bank moves over the next 24 hours absent any fresh escalation.
Outside of Fed updates, investors are looking out for data on August housing starts— the number of new homes on which construction has begun — due at 8:30 a.m.
Which stocks are in focus?
Shares of FedEx Corp. FDX, -0.16% are down after the logistics group missed profit expectations and cut its outlook, citing “increasing trade tensions,” and global economic sluggishness. Shares were down 12% in premarket action.
Chewy Inc.’s stock CHWY, -0.59% was off nearly 4% ahead of the bell on Wednesday after the pet retailer reported results.
CDW Corp.’s shares CDW, +0.71% are climbing by 6% premarket on news the tech group will join the S&P 500 this month.
AT&T Inc.’s stock T, -0.40% was in focus amid reports that bankers were pushing the telecom giant to unload its DirecTV unit. Shares of AT&T were off by about 0.6% in premarket trading.
How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.60% fell to 1.77% early Wednesday from 1.805% on Tuesday.
Read: Saudi oil attack shows bond traders are worrying more about growth than inflation
Gold prices GCZ19, -0.28% gave up 0.3% to trade at $1,508.50 an ounce ahead of the Fed decision, while the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, +0.15%, a gauge of the buck against a basket of leading rivals, was up 0.2%.
In Asia overnight Monday, Hong Kong’s Hang Seng Index HSI, -0.13% fell 0.1%. China’s CSI 300 Index 000300, +0.48% gained 0.5% after a 1.7% drop on Tuesday, and Japan’s Nikkei 225 index NIK, -0.18% fell 0.2%.
In Europe, the Stoxx Europe 600 SXXP, +0.09% was trading up by 0.1%.