US stock futures traded higher on Wednesday as investors looked past concerns over a potential Federal Reserve rate hike and awaited the central bank's policy decision, alongside earnings from technology heavyweights Meta Platforms and Microsoft.
As of 4:44 p.m., S&P 500 futures were up 0.21% at 7,480, while Nasdaq futures gained 0.15% to 27,966.25, signalling a positive start for Wall Street despite lingering macroeconomic uncertainties.
Treasury prices paused after a three-day rally, with investors reassessing the outlook for US monetary policy. Markets are currently pricing in around a 30% probability of a Federal Reserve interest rate hike, while the US dollar remained largely unchanged.
The spotlight is firmly on the Federal Reserve's policy announcement, with traders watching for any changes in the central bank's outlook on inflation, growth and interest rates. While the Federal Reserve is expected to keep interest rates steady at its Wednesday meeting, speculation is growing about a potential surprise rate hike as persistent inflation tests patience. Fed officials have held rates steady to allow temporary price spikes from tariffs and the war in Iran to cool, but rising fears suggest reaching the 2% inflation target may require tighter monetary policy to curb demand.
ALSO READ: Diesel Availability, Not Price, Is Real Risk From West Asia Crisis: Cholamandalam Investment CFO
Investor attention is also centred on quarterly earnings from Meta Platforms Inc. and Microsoft Corp., two companies at the heart of the artificial intelligence investment boom.
The results come at a time when enthusiasm surrounding the AI trade has begun to moderate. Investors are increasingly questioning whether the massive, and in many cases debt-funded, spending on AI infrastructure and data centres will generate sufficient long-term returns.
European markets, meanwhile, struggled for direction. The pan-European Stoxx 600 index erased early gains to trade 0.2% lower amid a busy corporate earnings session.
Geopolitical tensions in the Middle East also resurfaced after a brief lull in hostilities. Iran launched attacks on U.S. forces overnight, while the US and Saudi Arabia carried out strikes against Tehran-backed militias in Iraq.
Despite the escalation, financial markets showed limited signs of panic. While equities and bonds remained relatively resilient, oil prices rebounded sharply.
Brent crude rose 4.3% to $87.65 per barrel, recovering after a steep 16% decline over the previous three sessions as traders reassessed the potential impact of renewed geopolitical risks on global energy supplies.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
