US pre-open: Stocks firmly in the green ahead of Fed rate decision

Wall Street stocks were firmly in the green early on Wednesday as eyes turned to the Federal Open Market Committee's all-important interest rate decision.

As of 1520 BST, the Dow Jones Industrial Average was up 1.26% at 30,747.38, while the S&P 500 was 1.52% firmer at 3,792.12 and the Nasdaq Composite came out the gate 1.80% stronger at 11,023.76.

The Dow opened 382.55 points higher on Wednesday, reversing losses recorded in the previous session after the Bureau of Labor Statistics revealed the PPI for final demand rose 0.8% in May, in line with analysts' expectations, up from 0.4% in April but down 1.6% on March.

Wednesday's primary focus will be the Federal Reserve's interest rate decision at 1900 BST, which will be followed by a press conference at 1930 BST.

Both investors and economists expect the central bank to take aggressive action to tame surging inflation, with the market betting on a 75-basis-point rate hike following the FOMC's two-day policy meeting - the biggest increase since 1994. Expectations for the 75-point hike, as opposed to the previously predicted 50-point hike, came about as a result of a hotter-than-expected inflation reading and a rapidly worsening economic outlook.

The yield on the benchmark 10-year Treasury note was down more than eight points at 3.397% ahead of the Fed's decision, while the monetary policy-sensitive two-year note was more than ten points lower at 3.319%.

On the macro front, US mortgage applications increased by 6.60% week-on-week in the seven days ended 10 June, according to the Mortgage Bankers Association.

Elsewhere, US retail sales fell unexpectedly last month on the back of a steep decline in auto sales and a drop in furniture sales. According to the Department of Commerce, in seasonally adjusted terms, US retail sales volumes slipped at a month-on-month pace of 0.3% to reach $672.87bn. Economists had anticipated a rise of 0.3%.

On another note, manufacturing activity in the state of New York and part of New Jersey improved by a tad less than expected in June, the results of a closely-followed survey revealed. The so-called Empire State index increased from a reading of -11.6 for May to -1.2 for June.

Still on data, US business inventories increased 1.20% month-on-month in April, according to the Census Bureau, easing from an upwardly revised 2.4% gain in March and in line with market expectations

Finally, the National Association of Housebuilders' housing market index fell to 67 in June, down from 69 in the previous month to fall short of expectations for a print of 68 and hit its lowest level since June 2020.

No major corporate earnings were slated for release on Wednesday.

Reporting by Iain Gilbert at Sharecast.com