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The
U.S. central bank is expected to leave interest rates steady at
the 5%-5.25% range, unchanged for the first time since it kicked
off a historically aggressive round of policy tightening in
March 2022.
Traders see a 95% chance the Fed will hold rates at the current
levels, but have priced in 63% odds of a 25-basis-point hike in
July, according to the CME Fedwatch tool.
"Assuming the Fed does pause, it's possible the Fed's statement
could include wording designed to stamp out expectations that a
pause may lead to a cut," said Richard Flynn, UK Managing
Director at Charles Schwab.
The central bank is scheduled to release its policy statement
and new quarterly economic projections at 2 p.m. EDT (1800 GMT),
followed by Chair Jerome Powell's news conference.
U.S. stocks have rallied in recent weeks, pushing the benchmark
S&P 500 and Nasdaq to 14-month highs, boosted by signs of
economic resilience, an upbeat earnings season and hopes that
interest rates were near their peak.
While megacap technology stocks have driven much of the gains
this year, economically sensitive small-cap shares as well as
material and banking sectors have joined the rally recently.
After Tuesday's data showed consumer prices barely rose in May,
investors are now focused on producer prices reading that is
expected to show they fell 0.1% last month. The data is due at
8:30 a.m. ET.
At 7:16 a.m. ET, Dow e-minis were down 42 points, or 0.12%, S&P
500 e-minis were up 7 points, or 0.16%, and Nasdaq 100 e-minis
were up 17.75 points, or 0.12%.
In individual stocks, Advanced Micro Devices rose 2.6% premarket
after Reuters reported that Amazon Web Services was considering
using the company's artificial intelligence chips. Amazon.com's
shares edged up 0.4%.
Tesla Inc added 2.0% as the electric-vehicle maker slightly
increased the price of its Model Y car in the United States.
United Health Group fell 4.8% after the health insurer warned of
a spike in medical costs in the second quarter as more older
adults undergo non-urgent procedures they had delayed during the
pandemic.
Shares of CVS Health and Humana also fell in thin trading.
(Reporting by Shristi Achar A and Sruthi Shankar in
BengaluruEditing by Vinay Dwivedi)
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