US Stocks Likely To Open Higher Ahead Of FOMC Decision: 'Tariffs Remain The Dominant Market Force' Amid Rising Economic Uncertainty, Says Expert
U.S. stock futures advanced on Wednesday ahead of the Federal Open Market Committee’s (FOMC) decision on the interest rates. Futures of all four benchmark indices were higher in premarket trading.
On Tuesday, the stocks plunged after a two-day rally as the Magnificent 7 stocks dragged the indices down. Nvidia Corp.’s (NASDAQ:NVDA) GTC AI Conference failed to ignite a rally despite a slew of announcements.
The two-day FOMC meeting began on Tuesday, and the Federal Reserve Chairman Jerome Powell is expected to announce its decision during a press conference on Wednesday afternoon.
The 10-year Treasury yield stood at 4.29%, while the two-year yield was at 4.05%. According to the CME Group's FedWatch tool, there is a 99% chance that the Federal Reserve will keep interest rates unchanged.
| Futures | Change (+/-) |
| Nasdaq 100 | 0.16% |
| S&P 500 | 0.26% |
| Dow Jones | 0.02% |
| Russell 2000 | 0.28% |
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, were higher in premarket on Wednesday. The SPY was up 0.26% to $562.46, and the QQQ advanced 0.35% to $476.22, according to Benzinga Pro data.
Cues From The Last Session
Technology, communication services, and consumer discretionary sectors led U.S. stock declines on Tuesday, with the Nasdaq Composite falling roughly 300 points.
Specifically, Palantir Technologies Inc. (NASDAQ:PLTR) dropped about 4%, and Nvidia Corp. fell over 3%.
The Technology Select Sector SPDR Fund (NYSE:XLK) also saw a decline exceeding 1%. In contrast, energy and healthcare stocks rose, defying the broader market’s downward trend.
Economic data showed that U.S. import prices increased by 0.4% in February, exceeding expectations, while export prices rose 0.1%. The U.S. industrial production also surpassed estimates, increasing by 0.7% in February.
The Nasdaq 100 index continues to be in the correction zone as it was still 12.33% lower from its previous high. While Dow Jones was 7.75% lower, S&P 500 declined 8.67% from their respective 52-week highs.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.71% | 17,504.12 |
| S&P 500 | -1.07% | 5,614.66 |
| Dow Jones | -0.62% | 41,581.31 |
| Russell 2000 | -0.89% | 2,049.94 |
Insights From Analysts
"No rate change is expected," noted senior economist at WisdomTree, Jeremy Siegel ahead of the Federal Reserve’s decision, adding that the dot plot will be updated. The market is pricing in two rate cuts this year, he says, but he's "not convinced that the Fed will fully signal that just yet."
Furthermore, Siegel anticipates Powell will face intense scrutiny regarding declining market sentiment and inflation concerns.
He believes market direction hinges on the tariff situation; further escalation by President Donald Trump could trigger a significant downturn, potentially a “bear market”. Regarding Big Tech, Siegel argues current valuations, excluding Tesla Inc. (NASDAQ:TSLA), are high but not bubble-like, unlike the 2000 tech boom.
“For now, tariffs remain the dominant market force. The path forward depends on how Trump navigates trade policy—any softening would be bullish for equities, while continued escalation would put further downside pressure on stocks,” Siegel added.
“We don't expect any surprises at this week’s FOMC meeting, with the Fed likely holding the federal funds rate in the 4.25% to 4.5% range,” said Collin Martin, director, of fixed income strategy at the Schwab Center for Financial Research
“With growth concerns now making the most headlines, Fed Chairman Powell will likely be asked about the balance of risks given that all of the uncertainty out there could weigh on the labor market. We still expect rate cuts later this year, likely in the second half,” said Martin
See Also: How to Trade Futures
Upcoming Economic Data
Here’s what investors will keep an eye on Wednesday:
- FOMC will announce its decision on interest rates at 2:00 p.m., and Federal Reserve Chairman Jerome Powell will address a press conference at 2:30 p.m., ET.
Stocks In Focus:
- Signet Jewelers Ltd. (NYSE:SIG) was up 0.31% in premarket on Wednesday ahead of its earnings before the opening bell. Analysts expect earnings of $6.25 per share on revenue of $2.33 billion.
- Williams-Sonoma Inc. (NYSE:WSM) advanced 1.17% as Wall Street expects it to report earnings of $2.93 per share on revenue of $2.35 billion before the opening bell.
- Five Below Inc. (NASDAQ:FIVE) rose 1.26% ahead of its earnings after the closing bell. Analysts expect earnings of $3.38 per share on revenue of $1.39 billion.
- Healthequity Inc. (NASDAQ:HQY) slumped 13.09% after it posted downbeat earnings for its fourth quarter on Tuesday.
- StoneCo Ltd. (NASDAQ:STNE) jumped 8.02% after reporting better-than-expected fourth-quarter earnings and sales results.
- Super Micro Computer Inc. (NASDAQ:SMCI) was 2.01% higher after it announced an AI server lineup with new Nvidia GPU support.
- Nvidia Corp. (NASDAQ:NVDA) gained 1.06% ahead of the second day of the GTC AI conference.
- Tesla Inc. (NASDAQ:TSLA) climbed 2.96% after receiving approval for rolling out its first Robotaxi in California.
- TEN Holdings Inc. (NASDAQ:XHLD) surged 33.63% after it announced that it would initiate a $1 million stock repurchase program on March 17, 2025, with no set end date, funded by operating cash and subject to market conditions.
- 5E Advanced Materials Inc. (NASDAQ:FEAM) plunged 20.72% after it announced a resale of up to 20.63 million common shares by stockholders; the company will receive no proceeds and will cover all the expenses.
Commodities, Gold And Global Equity Markets:
Crude oil futures were trading lower in the early New York session by 0.63% to hover around $66.33 per barrel.
The gold spot index was down by 0.12% to $3,030.36 per ounce. Its last record high was at $3,045.39 per ounce. The Dollar Index was up by 0.35% at the 103.608 level.
Asian markets closed mixed on Wednesday with China’s CSI 300, South Korea's Kospi, Hong Kong's Hang Seng, and India's S&P BSE Sensex advancing in trade. Japan's Nikkei 225, and Australia's ASX 200 index declined. European markets were also mixed in trade.
Read Next:
Photo courtesy: Shutterstock