US Futures Little Changed as Investors Eye Fed Meeting Today

US Futures Little Changed as Investors Eye Fed Meeting Today

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Key Takeaways

• US equity market calm, investors expect economic insight by Powell
• Fed Chairman to highlight a brighter economic outlook

US equity futures remain virtually flat in pre-market hours on Wednesday, following yesterday’s relatively calm and relaxed trading. Investors today await to hear the latest updates on the economy. These will conclude the Federal Reserve’s two-day policy meeting.

Benchmark indexes ended Tuesday trading in a mixed fashion.  Market participants are holding their breath in anticipation of Jerome Powell’s remarks during a press conference today. Dow Jones and the S&P500 ended the session yesterday in negative territory, down by 0.39% and 0.16%, respectively. The Nasdaq Composite was able to close positive with a small gain of 0.09%. Futures today are muted and slightly to the downside.

The Federal Reserve to Release Economic Projections

The Federal Reserve later today will release a policy statement and latest economic projections. As a conclusion of the FOMC meeting, Federal Reserve Chairman Jerome Powell will present the central bank’s upgraded forecast for a full recovery from the pandemic. As well as a plan to move quicker on the path towards an improved labor market on the back of provided liquidity now that the stimulus package has arrived.

Fed’s Jerome Powell is likely to highlight an improving economic outlook underpinned by a slowdown in the spread of the coronavirus. In the current environment, the market does not expect the central bank to change its approach to bond purchases or make any changes in interest rates.

Mr. Powell has said multiple times in the recent past that the Fed would like to see a continued improvement and substantial progress in the economy before it decided to wind down its bond purchases. In this regard, the central bank should continue buying at least $120bn worth of bonds monthly to keep markets steady. The Fed chief also vowed to maintain the interest rates unchanged until he sees maximum employment and sustained 2% inflation.

Vaccine Rollout Picks

Fed Chair Jerome Powell will appear at a press conference to provide his take on the economy after the release of the Fed statement and the updated economic projections. Market participants are hopeful that the updates will show the jobs market should rebound faster than expected while inflation remains under control.

Inflation is already on the Fed’s radar with the recent surge in bond yields. That’s why investors will watch closely the Fed’s response to handling rising prices which threaten the high stock market valuations.

Fed Chairman Jerome Powell last spoke on the markets at the beginning of March when he eased inflation concerns. He had reiterated that the central bank does not plan to raise rates until labor market conditions improve significantly. As a result of his comments, the market received a confidence boost. Consequently, the Nasdaq Composite climbed from a 3.9% intraday loss to close around unchanged levels.

The upcoming meeting promises to be even more significant. According to Bank of America, the latest GDP expectations might see an upgrade boosted by the $1.9tn stimulus bill. In addition to the successful rollout of the vaccination program that ensures that about 2.4 million Americans are jabbed every day.