US pre-open: Stocks set for modest rebound ahead of Fed announcement

US futures pointed to a slightly firmer open on Wall Street, bouncing back after four sessions of losses as investors awaited the latest policy announcement from the Federal Reserve, in particular comments from Chair Janet Yellen.

At 1135 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all 0.3% firmer.

In Europe, the main indices were around 1% higher as investors there snapped up some bargains following the recent Brexit-driven declines.

“US stocks look set for a higher start on the final day of the FOMC meeting, though major averages remain well below where they started the weak as anxiety over the pace of future rate hikes remains,” said CMC Markets’ Jasper Lawler.

At the same time, oil prices were in the red amid ongoing worries the UK might vote to leave the European Union at next week’s referendum and on supply glut fears. West Texas Intermediate was down 0.9% to $48.07 a barrel and Brent crude was 1.2% lower at $49.22.

The Fed announcement is at 1900 BST, with the press conference at 1930 BST. Before that, investors will eye the release of US PPI and Empire manufacturing at 1330 BST, and industrial production at 1415 BST.

Societe Generale said: “With markets pricing in a zero percent chance of a rate hike at the June meeting, attention will instead turn to the Fed’s characterisation of the domestic economy. Despite the weak May employment report, we expect the Fed will be keen on striking a balanced stance, offsetting a modest downgrading of the labour market with a somewhat more upbeat assessment of household spending.

“At this juncture, Fed officials will likely be loathe to give up their hard-won gains on forcing market participants to readjust their odds for a rate hike to closer to the Fed’s position. Meanwhile, unlike in March, we do not expect the new Statement of Economic Projections (SEP) to generate any fireworks, but tweaks will be made to GDP and inflation.”

In corporate news, restaurant chain operator Bob Evans Farms was sharply lower in pre-market trade after its financial forecasts missed analysts’ expectations.

Jabil Circuit is due to report third-quarter earnings.