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Fed Decision, Statement To Be In Focus On Wall Street

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to regain ground following the sharp pullback seen in the previous session.

Bargain hunting may contribute to early strength on Wall Street, as traders pick up stocks at reduced levels after yesterday's weakness dragged the major averages down to two-month closing lows.

Early buying interest is likely to be somewhat subdued, however, as traders look ahead to the Federal Reserve's monetary policy decision this afternoon.

With the announcement looming, CME Group's FedWatch Tool is currently indicating an 82.0 percent chance of a 75 basis points rate hike and an 18.0 percent chance of a 100 basis point rate hike.

The size of the rate increase is likely to be in the spotlight, although traders are also likely to pay close attention to the accompanying statement for clues about the outlook for future rate hikes.

Following the advance seen going into the close of Monday's session, stocks showed a notable move back to the downside during trading on Tuesday. With the pullback on the day, the major averages fell to their lowest closing levels in two months.

The major averages climbed off their lows of the session in late-day trading but remained firmly negative. The Dow tumbled 313.45 points or 1.0 percent to 30,706.23, the Nasdaq slumped 109.97 points or 1.0 percent to 11,425.05 and the S&P 500 dove 43.96 points or 1.1 percent to 3,855.93.

The weakness on Wall Street came as traders seemed jittery ahead of the Federal Reserve's monetary policy decision.

The Fed is widely expected to raise interest rates by another 75 basis points, although some see an outside chance for a 100 basis point rate hike.

Treasury yields saw further upside ahead of the Fed announcement, with the yield on the benchmark ten-year note jumping to a new eleven-year high.

Several of other major central banks around the world are also scheduled to announce their latest monetary policy decisions this week, including the Bank of England and the Bank of Japan.

A notable drop by shares of Ford (F) also weighed on Wall Street, with the auto giant plunging by 12.3 percent to its lowest closing level in almost two months,

The pullback by Ford comes after the company warned inflation-related supplier costs during the third quarter will run about $1.0 billion higher than originally expected.

On the U.S. economic front, the Commerce Department released a report showing an unexpected spike in new residential construction in the U.S. in the month of August, although the report also showed a steeper than expected slump in building permits.

Gold stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Gold Bugs Index down by 3.0 percent. The sell-off by gold stocks came amid a modest decrease by the price of the precious metal.

Interest rate-sensitive housing and commercial real estate stocks also moved sharply lower, with the Philadelphia Housing Sector Index and the Dow Jones U.S. Real Estate Index both tumbling by 2.5 percent.

A notable decrease by the price of crude oil also contributed to substantial weakness among oil service stocks, resulting in a 2.5 percent plunge by the Philadelphia Oil Service Index.

Transportation, steel and computer hardware stocks also showed notable moves to the downside, reflecting broad based weakness on Wall Street.

Commodity, Currency Markets

Crude oil futures are jumping $1.49 to $85.43 a barrel after slumping $1.42 to $83.94 barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,683.60, up $12.50 compared to the previous session's close of $1,671.10. On Tuesday, gold fell $7.10.

On the currency front, the U.S. dollar is trading at 144.01 yen compared to the 143.75 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $0.9906 compared to yesterday's $0.9971.

Asia

Asian stocks closed mostly lower on Wednesday after Russian President Vladimir Putin announced a partial military mobilization in the country, bringing geopolitical tensions to the forefront.

In a televised address, Putin said the partial mobilization of its 2 million-strong military reserves is needed to defend Russian territories, claiming the West wants to destroy Russia and does not want peace in Ukraine.

Worries about aggressive Federal Reserve policy tightening also kept investors on their toes ahead of the central bank's highly anticipated interest rate decision later in the day.

China's Shanghai Composite Index slipped 0.2 percent to 3,117.18 as the Asian Development Bank cut its economic growth forecast for China and also lowered its outlook for developing Asia, citing the Ukraine conflict, Beijing's Covid Zero policy and central banks' efforts to combat inflation. Hong Kong's Hang Seng Index tumbled 1.8 percent to 18,444.62 on Fed jitters.

Japanese shares hit a two-month low as caution prevailed ahead of the Fed, Bank of Japan and Bank of England meetings.

The Nikkei 225 Index closed 1.4 percent lower at 27,313.13, marking its lowest closing level since July 19. The broader Topix slumped 1.4 percent to 1,920.80, its weakest close since September 7.

Air conditioner manufacturer Daikin Industries led losses to close down nearly 4 percent, while Japan Steel Works soared 4.1 percent despite the company lowering its profit forecast for the current fiscal year.

Seoul stocks fell ahead of a widely expected hefty rate hike from the U.S. Federal Reserve. The Kospi dropped 0.9 percent to 2,347.21. Samsung SDI, Naver and Kakao all lost around 2 percent.

Shipbuilder Daewoo Shipbuilding & Marine Engineering surged 8.9 percent amid heightened anticipation that the company's privatization would gather steam down the road.

Australian markets tumbled to hit a two-month low, with commodity-related stocks pacing the declines on fears of a global recession.

The benchmark S&P/ASX 200 Index gave up 1.6 percent to end at 6,700.20, falling for the third time in four sessions. The broader All Ordinaries Index dove 1.5 percent to 6,921.40.

Europe

European stocks are turning in a mixed performance on Wednesday, as investors await the Federal Reserve's interest rate decision and monitor increased political tensions with Russia.

The Bank of England, the Swiss National Bank, the Bank of Japan, and the Norges Bank in Norway are also announcing policy decisions this week.

Traders also remain focused on escalating geopolitical tensions after Russian President Vladimir Putin announced the partial mobilization of his country's military.

While the German DAX Index has edged down by 0.1 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.6 percent.

BP Plc and Shell are posting strong gains as oil prices jump on the news of the partial military mobilization ordered by Russia.

Housebuilder Barratt Developments, Persimmon and Taylor Wimpey have also moved notably higher on reports newly appointed Prime Minister Liz Truss will cut the rates of stamp duty for home purchases in the government's mini budget this week.

Shares of Vallourec SA has also surged. The French provider of premium tubular solutions has signed a 10-year agreement with Saudi Aramco for the supply of Premium Casing and Services.

Meanwhile, German energy major Uniper SE has plummeted. Germany confirmed the nationalization of the company by acquiring its shares held by Fortum Oyj, a Finnish energy company, for 1.70 euros per share.

Novartis AG has also declined. The Swiss drug major announced plans to file a petition to the U.S. Supreme Court to uphold the validity of the Gilenya (fingolimod) dosing regimen patent.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales in the month of August at 10 am ET.

Existing home sales are expected to slump by 2.3 percent to an annual rate of 4.70 million in August after plunging by 5.9 percent to a rate of 4.81 million in July.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended September 16th.

Crude oil inventories are expected to increase by 2.3 million barrels after climbing by 2.4 million barrels in the previous week.

The Federal Reserve is scheduled to announce its latest monetary policy decision at 2 pm ET, followed by Fed Chair Jerome Powell's post-meeting press conference at 2:30 pm ET.

Stocks In Focus

Shares of Coty (COTY) are moving notably higher in pre-market trading after the cosmetics maker raised its fiscal first quarter sales guidance and set out a comprehensive strategy to double its skincare sales by fiscal 2025.

Food producer General Mills (GIS) may also move to the upside after reporting better than expected fiscal first quarter earnings and raising its full-year forecast.

On the other hand, shares of Stitch Fix (SFIX) may come under pressure after the online clothing styling company reported a wider than expected fiscal fourth quarter loss and provided disappointing guidance.

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