US pre-open: Stocks seen flat to lower as focus shifts to Fed

US futures pointed to a flat to lower open on Wall Street as investors turned their attention to this week’s Federal Reserve policy meeting, with a rally in oil prices on the back of an OPEC and non-OPEC agreement to cut production failing to lift stocks overall.

At 1155 GMT, Dow Jones Industrial Average and S&P 500 futures were flat, while Nasdaq futures were down 0.4%.

Meanwhile, West Texas Intermediate was up 3.8% to $53.58 a barrel and Brent crude was 3.7% higher at $56.44 after non-OPEC countries agreed to cut production by 558,000 barrels per day, with the majority of the cuts pledged by Russia.

This is in addition to OPEC’s recent agreement to slash output by 1.2m barrels a day and marked the first such deal since 2001. Comments from Saudi Arabia’s energy minister Khalid al Falih also helped to underpin oil prices, as he said the country will “cut substantially to be below” the target agreed in November with OPEC members.

IG’s Chris Beauchamp said: “With an-almost empty corporate and economic calendar today, investors are already looking towards Wednesday’s Fed meeting as the key event of the week. Given the S&P 500 rallied 2.5% last week, it might seem to some that the Santa Rally has already arrived, with Janet Yellen unlikely to give investors any other presents.

“For the third time this year the market rally just grinds on, although with new highs on US exchanges at multi-year peaks, and options positioning suggesting the bears have left the building, perhaps the bulls have begun to run out of luck.”

The Fed’s two-day meeting kicks off on Tuesday, with the rate announcement on Wednesday and market participants largely pricing in a 25 basis points hike.

Societe Generale strategist Kit Juckes said: “It’s fair to say that a hike is fully priced in and if the old ‘buy the rumour, sell the fact’ adage has any value, maybe we’re supposed to look for some correction in the dollar rally and the bond sell-off after the event. But that’s a bit down the road.”

In corporate news, Boeing Inc could be in focus after securing a deal worth up to $16.6bn to sell 80 jetliners to Iran.

In currency markets, the dollar was up 0.4% against the yen, having earlier risen to its best level against the Japanese currency amid expectations of Fed rate hike.