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Stock futures fall as traders await the latest Federal Reserve rate hike decision

Stock futures

Traders on the NYSE floor

Source: NYSE

Stock futures fell on Wednesday as investors anticipated Wednesday’s Federal Reserve meeting.

Futures contracts linked to the Dow Jones Industrial Average lost 140 points or 0.4%. S&P 500 futures and Nasdaq Composite futures fell 0.4% and 0.3%, respectively.

The Fed will announce at 2:00 p.m. (ET) how much it is raising interest rates in its latest effort to rein in high inflation. Markets expect a 25 basis point, or 0.25 percentage point, hike from the central bank. On Tuesday, the Employment Cost Index, a measure of wage increases, showed pay rose 1% in the fourth quarter, less than the Dow Jones estimate of 1.1%.

Still, traders can get ahead expecting a more dovish tone from the Fed, or looking for signs that a break in the bulls or a pivot is coming.

“Aggressive tightening in 2022 has led to signs of inflation easing, but from levels that remain unacceptably high,” Ron Temple, chief market strategist at Lazard, said Tuesday. “With a 25 basis point hike already discounted by markets, Powell’s task is to send an unambiguous signal of the Fed’s commitment to controlling inflation.”

Comments from Chairman Jerome Powell will follow the Fed’s announcement.

Wall Street is coming off a solid session at the end of January. The Dow Jones ended Tuesday up nearly 369 points, 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.

The earnings season also continues. Peloton and Meta Platforms are expected to release their quarterly results on Wednesday.

Snap shares fell more than 15% after the social media company posted disappointing quarterly revenue. The company’s average revenue per user, a key metric for Snap, also fell short of expectations. Meanwhile, AMD reported better-than-expected earnings and revenue but warned of a 10% drop in first-quarter revenue.

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