U.S. equity futures edged cautiously higher Wednesday, while gold prices hit another all-time record, as investors braced for a crucial Federal Reserve rate decision, as well as commentary from Chairman Jerome Powell on the central bank’s new economic forecasts, later in the session.
Stocks ended sharply lower Tuesday, with the S&P 500 giving back most of its gains from earlier in the week and closing at levels seen prior to Friday’s late-session rally.
The S&P 500 ended just over 1% lower, while an underwhelming keynote from Nvidia (NVDA) CEO Jensen Huang at the tech giant’s GTC event pulled the Nasdaq 1.7% lower as Meta Platforms (META) became the last of the Magnificent 7 stocks to drift into negative territory for the year.
Market focus, however, is likely to switch firmly to the Fed’s 2:00 pm Eastern time rate decision, as well as the central bank’s new Summary of Economic Projects release, better-known as the Dot Plots.
Fed Chair Jerome Powell will speak to the media at 2:30 pm Eastern time.
Anna Moneymaker/Getty Images
Analysts are expecting the new projections to show a modest reduction in GDP growth forecasts while a nudge higher in the inflation outlook. Powell’s remarks to the press, and any comments he’s likely to make regarding the impact of President Trump’s tariff and economic policies, will be closely-scrutinized.
“Markets will be even more sensitive than usual
to Powell’s comments in the press confidence, but the
Chair knows that strong predictions or signals of future action
are futile in the current environment,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “And he is unlikely to be
drawn on how he would respond in hypothetical scenarios.”
“The danger of this approach, however, is markets are left
with little clarity on how the Committee will respond if the
trade war intensifies,” he added.
Related: Tariff uncertainty triggers record change to U.S. stock market outlook
Benchmark Treasury bond yields were little-changed heading into the Wednesday session, with 10-year notes trading at 4.289% and 2-year notes hovering at 4.048%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.35% higher at 106.604, but remains pinned to its early-November lows.
Gold prices, meanwhile, rose another 0.52% to hit a fresh all-time high of $3,045.69 per ounce, taking the bullion’s year-to-date gain to around 15.5%.
On Wall Street, stocks are trending cautiously higher following last night’s selloff, which pegged the S&P 500’s year-to-date decline at 4.33%, with the futures contracts tied to the benchmark indicating an opening bell gain of around 12 points.
The Dow Jones Industrial Average, meanwhile, is called 53 points higher with the Nasdaq priced for a 56 point advance.
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In overseas markets, Europe’s Stoxx 600 slipped 0.21% in mid-day Frankfurt trading, with Germany’s DAX down 0.23%, following yesterday’s vote in Germany’s lower house of parliament that cleared the way for a new $550 billion defense and infrastructure fund.
Overnight in Asia, the Bank of Japan held its benchmark short-term lending rate stead at 0.5%, with Governor Kazuo Udea noting the impact of U.S. policies on the country’s effort to reignite growth and inflation.
“Japan’s wage and price conditions are on track, possibly stronger than expected,” Udea said. But the uncertain U.S. and global outlook makes it difficult to assess the potential impact on Japan’s economy.”
“As such, we would like to look at upcoming data in early April, to reconsider our forecasts,” he added.
The Nikkei 225 closed 0.25% lower prior to the BoJ announcement, while the regional MSCI ex-Japan benchmark fell 0.19% into the close of trading following last night’s selloff on Wall Street.
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