US pre-open: Futures higher ahead of Fed rate decision

As of 1300 GMT, Dow Jones futures were up 0.11%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.14% and 0.23% higher, respectively.

The Dow closed 173.01 points higher on Tuesday, reversing earlier losses to extend gains recorded in the previous session as market participants took some time to digest key inflation data.

Wednesday's primary focus will be on the US central bank, which was widely anticipated to hold its benchmark overnight borrowing rate steady in the 5.25-5.5% range, while investors will also comb through comments from chairman Jerome Powell for any hints as to just how soon rate cuts can be expected.

The Fed's decision comes just 24 hours after a report from the Department of Labor revealed that the cost of living had drifted a tad lower in November amid another decline in energy prices. In seasonally adjusted terms, the country's consumer price index edged up by 0.1% month-on-month, while in annual terms, on the other hand, the rate of change ticked lower by one-tenth of a percentage point to 3.1%.

Trade Nation's David Morrison said: "The central bank is expected to keep rates unchanged. But it will also release its quarterly Summary of Economic Projections where individual FOMC members provide their forecasts for GDP, Unemployment, inflation and the Fed Funds rate for next year and beyond. The 'Dot Plot' of interest rate predictions is likely to show that the FOMC is considerably less dovish than market participants. The degree to which this proves to be the case is likely to be the main factor in moving markets."

Elsewhere on the macro front, US mortgage applications surged by 7.4% in the week ending 8 December, according to the Mortgage Bankers Association of America, marking a sixth consecutive increase and pushing applications to their highest level in more than four months, mostly due to a continuous decline in interest rates. Refinancing applications saw a significant uptick of 19.4% week-on-week, while applications for new home purchases rebounded by 3.5% as the average interest rate on a 30-year fixed mortgage fell to 7.07% - hitting its lowest point since late July.

Still to come, November's producer price index will be published at 1330 GMT, with economists expecting to see a rise of 0.1%, up from a 0.5% decline in the prior month. Excluding food and energy, PPI was anticipated to rise 0.2%, up from a flat reading a month earlier.

In the corporate space, drugmaker Pfizer shares traded lower in pre-market after issuing full-year profit and revenue guidance that lagged consensus. Pfizer also revealed on Wednesday that it has now received all regulatory approvals needed to close its $43.0bn acquisition of Seagen after agreeing to donate the rights of royalties from sales of its Bavencio cancer drug to the American Association for Cancer Research.

Reporting by Iain Gilbert at Sharecast.com