US pre-open: Stocks seen slightly lower ahead of Fed; blizzard could dent volumes

Stocks on Wall Street looked set for a slightly weaker open on Tuesday as investors awaited the Federal Reserve's latest rate decision, while trading volumes could be affected by a "life-threatening" blizzard set to hit Northeastern states.

At 1100 GMT, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all down 0.1%.

A state of emergency was declared for the city of New York as Storm Stella looks set to cover the East Cost in a blanket of snow. Flights have been cancelled, while schools have been shut, along with some portions of the NY subway.

Chris Beauchamp, chief market analyst at IG, said: "US markets could well feel the effect of the blizzard that has descended on New York in the past few hours. We could be in for a volume-light session, compounding the probability of another snooze-fest for US markets ahead of tomorrow’s Fed decision.

"PPI data offers the only real data point of note, but overall we can look forward to another session of drift before the big event tomorrow. Ahead of the open, we expect the Dow to start at 20,862, down 19 points from last night’s close."

The producer price index is due at 1230 GMT.

In currency markets, the dollar was up 0.7% versus the pound at 0.8245, underpinned by expectations of a rate hike. In addition, sterling was weighed by concerns about Brexit after the UK parliament gave Prime Minister Theresa May the go-ahead to trigger Article 50 to begin divorce proceedings with the European Union.

The Fed will kick off its two-day meeting on Tuesday amid expectations it will announce a 25 basis points hike to the funds rate to between 0.75% and 1.00%.

Societe Generale said: "The market is fully priced in for a rate hike at the 15 March FOMC meeting. The key question is whether the Fed will guide the markets towards more rate hikes in coming years."

In a speech earlier this month, Fed chair Janet Yellen said a rate hike would "likely be appropriate" at the March meeting as long as employment and inflation continued to evolve in line with the FOMC's expectations.

In corporate news, Valeant Pharmaceuticals shares tanked in pre-market trade after Bill Ackman’s Pershing Square Capital Management said it sold its 10% stake in the company.

Automation software group Synopsys nudged higher in pre-market trade on news that it will enter the S&P 500 later this week.

Meanwhile, airline stocks could be in focus after flights were cancelled across the East Coast due to the snowstorm.