U.S. Stocks May Lack Direction Ahead Of Fed Announcement

The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction after moving sharply higher over the two previous sessions.

Traders may be reluctant to make significant moves ahead of the Federal Reserve's highly anticipated monetary policy announcement this afternoon.

With the announcement just hours away, CME Group's FedWatch Tool is currently indicating a 90.8 percent chance the Fed will raise interest rates by 25 basis points.

Recent troubles in the banking sector led to some speculation the Fed might leave rates unchanged, but large-scale efforts to address the turmoil have largely negated that sentiment.

Subsequently, the focus is likely to be on the Fed's accompanying statement as well as its latest projections for the economy, inflation and interest rates.

Stocks moved sharply higher over the course of the trading session on Tuesday, extending the upward move seen during trading on Monday. The major averages all showed strong moves to the upside, with the tech-heavy Nasdaq reaching its best closing level in over a month.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Dow jumped 316.02 points or 1.0 percent to 32,560.60, the Nasdaq surged 184.57 points or 1.6 percent to 11,860.11 and the S&P 500 shot up 51.30 points or 1.3 percent at 4,002.87.

The extended rally on Wall Street partly reflected easing concerns about turmoil in the financial sector following recent steps taken to rescue distressed banks in the U.S. and Europe.

Positive sentiment was also generated in reaction to remarks by Treasury Secretary Janet Yellen, who said the government is prepared to once again take action to protect bank depositors if smaller lenders are threatened.

In remarks prepared to the American Bankers Association, Yellen addressed recent steps taken to protect depositors following the failures of Silicon Valley Bank and Signature Bank.

"The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system," Yellen said.

She continued, "And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."

Banking stocks turned in some of the market's best performances on the day, driving the KBW Bank Index up by 5.0 percent. The index continued to regain ground after ending last Friday's trading at its lowest closing level in well over two years.

Substantial strength was also visible among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index spiking by 3.5 percent and 3.0 percent, respectively.

Brokerage stocks also saw considerable strength on the day, resulting in a 2.9 percent surge by the NYSE Arca Broker/Dealer Index.

Airline, computer hardware and steel stocks also moved notably higher, while gold and utility stocks bucked the uptrend.

Commodity, Currency Markets

Crude oil futures are slipping $0.21 to $69.46 a barrel after surging $1.85 to $69.67 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,944.50, up $3.40 compared to the previous session's close of $1,941.10. On Tuesday, gold plunged $41.70.

On the currency front, the U.S. dollar is trading at 132.88 yen compared to the 132.51 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0781 compared to yesterday's $1.0768.


Asian markets gained on Wednesday amidst global bullish sentiment that followed renewed assurances from the U.S. government on support amidst the banking crisis. Markets in the meanwhile are expecting the Fed to settle for a 25-basis point rate hike later in the day.

China's Shanghai Composite Index rose 0.3 percent to 3,265.75. The day's trading ranged between 3,255.74 and 3,279.39. The Shenzhen Component Index gained 69.68 points or 0.6 percent to close at 11,497.10.

The Japanese benchmark Nikkei 225 Index surged 520.94 points or 1.9 percent to end trading at 27,466.61. The day's trading range was between 27,267.26 and 27,520.97.

Ebara Corp. and Rakuten Inc. topped with rallies in excess of 5 percent. TDK Corp., Daiwa Securities Group as well as Nomura Holdings, added more than 4 percent. The 0.7 percent decline by Mitsubishi Estate Co. was the most for any scrip in the index.

The Hang Seng Index of the Hong Kong Stock Exchange advanced 332.67 points or 1.7 percent from the previous close to finish trading at 19,591.43. The day's trading range was between a high of 19,775.69 and a low of 19,428.36.

The Korean Stock Exchange's Kospi Index added 28.61 points or 1.2 percent to close trading at 2,416.96. The day's trading range was between 2,402.78 and 2,417.47.

Australia's S&P/ASX200 Index closed trading at 7,015.60 after gaining 60.20 points or 0.9 percent. The day's trading was between 6,955.40 and 7,032.00.

Energy businesses New Hope Corporation and Woodside Energy Group gained more than 5 percent. Beach Energy followed with a 4.7 percent spike. Media and entertainment business Domain Holdings Australia added 4.3 percent. Magellan Financial Group gained 3.9 percent.

Materials businesses bore the brunt of the selling pressure on Wednesday. Silver Lake Resources and Regis Resources both dropped more than 5 percent. Perseus Mining and Gold Road resources followed with a decline or more than 4 percent. Core Lithium shed more than 3 percent.


European stocks are broadly higher on Wednesday, with investors largely making cautious moves as they await the Federal Reserve's policy announcement due later in the day.

Worries about banking turmoil have eased a bit following coordinated steps taken by governments and central banks, and the focus now is on Fed's rate decision and the accompanying statement for clues about future rate hikes.

While the German DAX Index is up by 0.5 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In the U.K. market, Barclays, HSBC Holdings, Natwest Group, Standard Chartered and Lloyds Banking Group are gaining 1.5 to 3%.

Melrose Industries, Coca-Cola, WPP, Kingfisher and Smith & Nephew are also notably higher.

British Land Company is down more than 4%. Segro is lower by about 3.2% and Land Securities is down 2.6%. Rio Tinto, Severn Trent, BT Group, Burberry Group, Vodafone, Mondi and DS Smith are also notably lower.

In Paris, Societe Generale, WorldLine, BNP Paribas, L'Oreal, Credit Agricole and Renault are gaining 1 to 2.3%.

Unibail Rodamco is declining 3.7% and TotalEnergies is down by about 1.1%.

In the German market, Covestro is rising 2.6%. Siemens, Siemens Healthineers, Zalando, Henkel, HeidelbergCement, Porsche, BMW and Mercedes-Benz Group are gaining 1.5 to 2%.

In economic news, U.K. consumer price inflation unexpectedly accelerated in February after slowing for three straight months, adding to the dilemma of the Bank of England policymakers who are set to decide this week whether to raise interest rates this month in the backdrop of the financial market turmoil.

Consumer prices increased 10.4% annually in February after a 10.1% gain in January, the Office for National Statistics reported Wednesday. Inflation was forecast to slow to 9.9%.

Headline inflation had peaked at 11.1% in October 2022 to mark the highest level since 1981.

Core inflation advanced to 6.2% from 5.8% a month ago, while it was forecast to slow marginally to 5.7%.

A report from the European Central Bank said the euro area current account surplus grew at the start of the year, underpinned by an increase in the surplus on goods trade.

The current account surplus rose to EUR 17 billion in January from EUR 13.0 billion in the previous month, the report showed. The expected surplus was EUR 16.5 billion.

U.S. Economic Reports

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended March 17th at 10:30 am ET.

Crude oil inventories are expected to decrease by 1.4 million barrels after climbing by 1.6 million barrels in the previous week.

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

Stocks In Focus

Shares of Luminar Technologies (LAZR) are moving sharply lower in pre-market trading after Goldman Sachs downgraded its rating on the company's stock to Sell from Neutral.

Petco Health and Wellness (WOOF) may also come under pressure after the pet supplies retailer reported weaker than expected fiscal fourth quarter earnings.

Meanwhile, shares of Virgin Orbit Holdings (VORB) are soaring after a report from Reuters said billionaire Richard Branson's cash-strapped rocket builder is nearing a deal for a $200 million investment from Texas-based venture capital investor Matthew Brown.

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