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the three major indexes ended a choppier session higher on
Monday led by gains in beaten down industrial shares and some
megacap technology and growth stocks, though trading volumes
were light suggesting caution ahead of the start of the two-day
policy meeting later on Tuesday.
"Wall Street rebounded, but instead of adding to their risk
exposure, it is more likely that investors covered short
positions to mitigate the risk of a surprise on Wednesday," said
Charalampos Pissouros, senior investment analyst at XM.
"The fundamental environment has hardly changed."
The U.S. central bank is widely expected to hike rates by a
third-straight 75 basis points on Wednesday, with markets also
pricing in a 17% chance of a 100 bps increase and expect
terminal rate at 4.5% by March 2023.
Focus will also be on the updated economic projections and dot
plot estimates for cues on policymakers' sense of the endpoint
for rates and the outlooks for unemployment, inflation, and
economic growth.
"This week, the dot plot will be more carefully watched than the
rate decision itself, as it will certainly show a higher
terminal rate for 2023," said Ipek Ozkardeskaya, senior analyst
at Swissquote Bank.
The benchmark S&P 500 index has lost 18.2% so far this year as
investors fear aggressive policy tightening measures could tip
the U.S. economy into a recession, with a recent dire outlook
from delivery firm FedEx Corp and an inverted U.S. Treasury
yield curve adding to the woes.
At 6:23 a.m. ET, Dow e-minis were down 139 points, or 0.45%, S&P
500 e-minis were down 19.75 points, or 0.5%, and Nasdaq 100
e-minis were down 70.5 points, or 0.59%.
Ford Motor Co slid 4.8% in premarket trading after the automaker
said inflation-related supplier costs will run about $1 billion
higher than expected in the current quarter and sees 40,000 to
45,000 vehicles in inventory due to lack of parts, delaying
sales.
(Reporting by Devik Jain in Bengaluru; Editing by Shounak
Dasgupta)
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