Dow futures fall as traders await Federal Reserve’s latest rate hike decision

Traders on the floor of the NYSE

Source: NYSE

Stock futures fell on Wednesday as investors awaited the Federal Reserve’s latest policy decision.

Futures for the Dow Jones industrial average fell 188 points, or 0.6%. S&P 500 futures were down nearly 0.4%. Meanwhile, Nasdaq-100 futures were 0.2% lower.

Corporate earnings season continues. Peloton Shares rose more than 4% in premarket trading after the fitness equipment company said Net loss decreased year-on-year. Advanced Micro Devices Shares gained more than 3% after the semiconductor company Reported fourth quarter earnings beat. Meanwhile, Snap Shares fell more than 15% after the social media company posted disappointing quarterly earnings.

The central bank will announce at 2pm ET how much it will raise interest rates in its latest effort to curb high inflation, with market participants expecting a 25 basis point hike from the central bank. The Fed’s announcement will be followed by remarks from Chairman Jerome Powell.

Few indicators that inflation is easing in the broader economy have investors expecting a more dovish tone from the central bank. On Tuesday, the employment cost index, a measure of wage growth, showed compensation rose 1% in the fourth quarter, missing the Dow Jones estimate of 1.1%.

However, traders can get ahead of themselves, with a pause or even a pivot on the uptrend coming soon.

The Fed’s news on Wednesday “will push back against the pivot narrative and thus current bond market prices,” DoubleLine’s Jeffrey Gundlach wrote in a tweet. “Should be interesting.”

Wall Street is coming off a strong session at the end of January. The Dow rose nearly 369 points on Tuesday, up 1.09%. The S&P 500 gained 1.46% to cap its best January performance since 2019. The tech-heavy Nasdaq composite rose 1.67%, posting its best January performance in 22 years.

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