US pre-open: Stocks set for muted start ahead of Fed announcement
US futures pointed to a muted open on Wall Street as investors eyed the latest policy announcement from the Federal Reserve amid expectations of a 25 basis points rate hike, with the Dow within touching distance of the 20,000 mark.
At 1110 GMT, Dow Jones Industrial Average futures were down 0.1%, while S&P 500 and Nasdaq futures were flat.
Remo Fritschi, institutional sales manager at ADS Securities, said: “After another day of fresh highs, Wall Street is currently looking at a flat start to Wednesday’s session with the advance retail sales data and the Federal Reserve’s call over interest rates both looming large. Yet again the indices are at dizzying levels and 20,000 is within striking distance for the Dow, but the reality is that at some point, profits are going to be booked – the data we have coming today could well have the potential to act as the catalyst.
“If the Fed strikes the hawkish tone that would be expected if inflation is starting to heat up, then that may be sufficient to call time on the bull market rally.”
Meanwhile, oil prices retreated after the American Petroleum Institute said late on Tuesday that in the week ended 9 December, there was a 4.68m barrel build in US crude inventory levels, versus a 1.5m draw expected.
West Texas Intermediate was down 1.2% to $52.36 a barrel and Brent crude was 1.1% lower at $55.14.
In currency markets, the dollar was down 0.2% versus the yen, flat against the pound and 0.1% weaker versus the euro.
RBC Capital Markets said that with a 25bp hike priced in, how the US dollar trades will be dictated by what the market reads into the prospects for rates next year.
“The key inputs into that will be how (if) the dot plot changes in the summary of economic projections and the general tone of Chair Yellen’s comments in the press conference.
“Our economists think Yellen is likely to echo her sentiments from her JEC testimony a few weeks ago - which were pretty balanced. Overall, we see the risks skewed slightly toward disappointment and a softer USD.”
As well as the rate decision and accompanying statement, investors were looking to the release of retail sales and industrial production figures.
Retail sales are at 1330 GMT, while industrial production is at 1415 GMT and business inventories are at 1500 GMT.
In corporate news, car rental company Hertz Global Holdings was likely to be in focus after saying late on Tuesday that chief executive John Tague will retire, to be succeeded by Kathryn Marinello.
Johnson & Johnson nudged higher in pre-market trade as it said it has ended discussions with Swiss biotech firm Actelion regarding a potential transaction.