US pre-open: Futures trade higher ahead of FOMC meeting
Wall Street futures were in the green ahead of the bell as the Federal Reserve gets ready to kick off its two-day policy meeting in Washington DC.
As of 1320 GMT, Dow Jones futures were up 0.64%, while S&P 500 and Nasdaq-100 futures had the indices opening 1.02% and 1.32% firmer, respectively.
The Dow closed 128.85 points lower on Monday but managed to carve out its best month since January 1976 despite a better-than-expected but still somewhat mixed Q3 earnings season.
Tuesday's pre-market gains come as market participants hold out hope that the central bank will offer some kind of sign that it will begin to ease its tightening stance in the coming months. The Federal Reserve is widely expected to reveal that it will hike interest rates by another 75 basis points at the conclusion of its meeting tomorrow.
Swissquote's Ipek Ozkardeskaya said: "The Fed could call the end of the aggressive rate tightening and signal slower rate hikes to enter the final phase of policy tightening, before pausing. So, we are at that point, where, after this week's 4th consecutive 75bp rate hike, the Fed could hint at a 50bp hike in December. Then, the season finale would come with a couple of 25bp hikes in the first quarter of 2023, then a pause. But there is a risk in there. The risk is, because investors are waiting in ambush for the Fed to soften its tone, any sign of a less hawkish Fed could send both the bond and equity markets rallying.
"And that's exactly what the Fed doesn't want to happen. A broadly cheerful market rally would boost inflation expectations, and inflation. And inflation is nowhere close to the Fed's 2% policy target. Therefore, if we see a determined inflation warrior that is ready to send everything under the bus to fight inflation, then we could call the end of the latest bear market rally and expect fresh lows in this selloff cycle. If however, Powell sounds reasonably hawkish, we shall see consolidation, with hope of further recovery."
Unconfirmed reports out of China that the Asian nation may be looking to move away from its Zero Covid policy were also underlining sentiment prior to the open.
On the macro front, S&P Global's October manufacturing PMI will be published at 1445 GMT, while last month's ISM manufacturing PMI, September JOLTs job opening data, and September construction spending data will follow at 1500 GMT, and the Dallas Fed's services index will be on deck at 1530 GMT.
In the corporate space, third-quarter revenues came in ahead of expectations at Uber on Tuesday after a surge in demand post-pandemic. Uber reported revenues of $8.3bn in the three months ended 30 September, ahead of forecasts of around $8.1bn and a 72% jump on the same period a year previously.
Drugmaker Pfizer raised full-year guidance on Tuesday after beating earnings and revenue expectations for the third quarter. Pfizer, which posted Q3 revenues of $22.6bn and adjusted earnings per share of $1.78, now expects earnings per share of $6.40-$6.50 for the year, up from its previous forecast of $6.30-$6.45.
Outside of earnings, Johnson & Johnson said on Tuesday that it has agreed to buy heart recovery specialist Abiomed in a $16.6bn deal. Under the terms of the transaction, J&J will make an upfront payment of $380.00 per share. Abiomed shareholders will also receive a non-tradeable contingent value right entitling the holder to receive up to $35.00 per share in cash if certain commercial and clinical milestones are achieved.
Reporting by Iain Gilbert at Sharecast.com