US pre-open: Stocks set for muted open ahead of expected rate hike

US futures pointed to a muted open on Wall Street on Wednesday as investors priced in the second rate hike of the year by the Federal Reserve.

At 1150 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.1%, while Nasdaq futures were up 0.2%.

With economists almost certain interest rates will be lifted by another 25 basis points to between 1.00 and 1.25%, the focus will be on what Fed Chair Janet Yellen has to say about any future hikes.

Spreadex analyst Connor Campbell said: "Before Janet Yellen and co. convene there is some currency-relevant data to digest, namely the inflation and retail sales readings; the former is set to come in unchanged at 0.2%, while the latter is expected to slip from 0.4% to 0.1% month-on-month.

"And though that doesn’t paint a particularly encouraging picture of the US economy, neither figure is bad enough to deter the Fed from raising rates, the likelihood of which currently stands at 95.8% according to the CME Group."

David Morrison, senior market strategist at SpreadCo, said: "The main questions concern the recent downturn in US inflation together with an ambiguous growth outlook. It could be that the Fed insists that these factors are transitory and maintains a hawkish outlook. This would mean signalling another rate hike together with balance sheet reduction this year.

"But if the Fed expresses any concerns over recent weak data, downplays the continued improvement in the headline employment numbers and suggests that it may pause in its rate hikes, this would represent a significant shift in outlook and put further downside pressure on the US dollar."

US retail sales and the consumer price index are at 1330 BST, while business inventories are at 1500 BST.

In currency markets, the dollar was up 0.2% against the pound, which slipped after data from the Office for National Statistics revealed that wages have fallen and unemployment has held steady.

In corporate news, electric car maker Tesla was in the black in pre-market trade following news that its Model X SUV has been given a five-star safety rating and after Ron Baron, the founder of Baron Capital, told CNBC the stock could jump by more than 50% by next year.