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22 Sep 2021
2 min read

Stock Futures Advance Ahead of Key Federal Reserve Update

*OspreyFX would like to state that traders should research extensively before following any information given hereby. Any assumptions made in this article are provided solely for entertainment purposes and not for traders to guide or alter their positions. Please read our Terms & Conditions and Risk Disclosure for more information.

Key Takeaways

  • Stock futures push higher, Dow futures up more than 200 points
  • Key speech by Fed Chair Jerome Powell to lay out the central bank’s next steps

Stock Futures Gain, Dow Futures Up Over 200 Points

US stock index futures rose broadly in early morning activity on Wednesday. The move up in pre-market trading follows an unsuccessful attempt for a rebound on Tuesday, after the global market selloff.

Futures contracts tied to the major averages were all in positive territory, and gaining traction. Futures on the Dow Jones Industrial Average advanced more than 200 points or over 0.6%. S&P500 futures and Nasdaq Composite futures added 0.5%, and 0.4%, respectively.

In regular trading on Tuesday, the three stock gauges fluctuated in a whipsaw trading environment. Early in the session yesterday, investors struggled to stage a comeback after Monday’s deep losses. While futures showed a higher open by more than 1.2% for the Dow, regular trading erased the pre-market gains.

Tuesday’s market session saw the Dow give up its advance as the 30-stock finished the day lower by 50 points, or 0.15%, to 33,919.84. The S&P500 was barely changed but still in negative territory, down 3.54 points, or less than 0.1%, to 4,354.19. The tech-centered Nasdaq Composite rose modestly by 32.49 points, or 0.22%, to 14,746.60.

Stock Markets Fail to Recover on Tuesday

The global markets endured a strong selling wave on Monday when Evergrande’s collapse appeared nearly impossible to be avoided. In continuation of the risk-averse approach, Tuesday’s market session was widely passive.

Adding to early-September losses, the Dow Jones Industrial Average is now down 4% in September. The broader S&P500 index is down 3.7% for the same period.

While the uncertain faith of Evergrande is still weighing on the market sentiment, investors are positioning to scrutinize today’s Federal Reserve update.

Federal Reserve Update on the Agenda Today

The Fed is concluding its two-day meeting today with a release of a monetary policy update from the Fed Chair, Jerome Powell. The members of the Federal Open Market Committee (FOMC) have gathered to discuss the next steps that would aim to direct the stance of the Fed toward the economy.

Traders and investors expect to hear a detailed view describing how and when exactly the Fed intends to begin tapering its bond-buying. Tapering, or reducing, the monetary support has been expected to start before the end of the year.

On that note, the Fed Chairman may lay out the timeline of reversing the easy-money policies, in particular, the $120bn in monthly bond-buying. Some analysts predict that Mr. Powell would provide a framework that would aim to initiate tapering in November or December.

The update from Fed Chair Jerome Powell could increase the volatility in stocks and currencies, which could present trading opportunities in US dollar currency pairs. Gold, as a safe haven, could also react at the time of the event.

European Markets Press Forward

In overseas stock market action, stability is looking to settle in European bourses today. Major indexes across the old continent opened sharply in the green, continuing their strong performance from a day earlier.

The FTSE100 in London and the CAC40 in Paris gained 1% out of the gate. The broad Stoxx 600 was also in the green by about 1%.

Crypto assets attempt to bounce back after struggling earlier in the day. Bitcoin is up about 2% to the current market price of $42,200. Ether is up almost 6% to $2,930 after sliding to a six-week low near $2,650 per coin.

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