US stock futures edged higher on Wednesday as Wall Street attempted to stabilize after two consecutive sessions of declines. The modest rebound comes as oil prices ease, offering some relief ahead of the Federal Reserve's highly anticipated policy decision.
S&P 500 futures rose about 0.15%, Nasdaq 100 futures gained 0.3%, and Dow futures were little changed. The tentative tone reflects lingering concerns: the 10-year Treasury yield remains near 5%, inflation worries have resurfaced, and investors are debating whether the expected quarter-point rate hike will be a one-off or the start of a new tightening cycle.
Fed decision: what comes after the hike?
Markets assign roughly a 93% probability to a 25-basis-point rate increase at 2 pm ET, which would mark the Fed's first hike since 2023. The bigger test, however, is Chair Kevin Warsh's guidance on the path beyond September. According to Tickmill strategist Patrick Munnelly, investors will assess whether the Fed can tighten enough to reassure the bond market without triggering another disorderly sell-off in Treasuries or equities.
Oil eases, but yields remain a concern
Brent crude fell around 1% toward $107.50 a barrel, while WTI dropped roughly 1.5% after the American Petroleum Institute reported a 7.1 million-barrel increase in US crude inventories. MUFG analyst Soojin Kim told The Wall Street Journal that the build has eased some immediate supply concerns, though Middle East disruptions remain significant. The 10-year Treasury yield hovering near 5% continues to pressure equity valuations.
Retail sales data ahead of the Fed
August retail sales figures are due at 8:30 am ET, providing traders with a final read on consumer spending before the central bank's announcement. Economists expect headline sales to rebound about 0.8% after July's 0.6% decline, with core sales forecast to rise 0.5%. A stronger number could reinforce the argument that demand remains resilient enough to tolerate further tightening, potentially pushing Treasury yields higher again.
Intel jumps on possible SK Hynix US chip deal
Intel surged more than 5% in premarket trading following reports that SK Hynix is in exploratory talks about producing memory chips in the US for the first time. Options include leasing part of Intel's delayed Ohio manufacturing site or forming a venture involving cloud companies. SK Hynix told Investing.com that it is reviewing ways to expand manufacturing but that no decision has been made. For more on this, see Intel's surge on SK Hynix talks.
AI trade steadies, but not settled
Nvidia edged higher in premarket trading, while Microsoft and Apple slipped slightly and Meta was little changed. This follows a volatile stretch sparked by calls from leading AI executives for slower development of increasingly powerful systems. JPMorgan analyst Gokul Hariharan, cited by MarketWatch, argued that AI development is unlikely to slow materially, but investors are still reassessing how much risk should be embedded in stretched technology valuations. The broader market's reaction to the Fed will likely set the tone for tech stocks in the near term.
As the Fed decision approaches, market participants are also keeping an eye on gold's resilience above $4,300, with Warsh's tone seen as key. Meanwhile, yields above 5% have already pressured equities, and any further rise could weigh on valuations.
This article is for informational purposes only and does not constitute financial advice.
