June 17 - U.S. equity futures in the S&P 500 and Nasdaq rose slightly on Wednesday, driven in part by a rebound in chip stocks as markets prepared for the first interest-rate decision overseen by Federal Reserve Chair Kevin Warsh.
Traders entered the Federal Open Market Committee decision day after wall-to-wall market moves earlier in the week. Stocks finished mixed on Tuesday following a steep relief rally that had been prompted by optimism around an interim U.S.-Iran agreement. That hope pushed oil prices lower and, in turn, helped alleviate some inflation concerns that had weighed on investors.
At the FOMC meeting, policymakers are expected to keep the target federal funds rate at the current 3.50% to 3.75% range. The central bank faces competing forces as officials consider higher oil-driven inflation pressures tied to the Middle East conflict. The Fed's policy announcement is scheduled for 2:00 p.m. ET, and market participants will scrutinize Warsh's first press conference for any clues on how he views inflation, the jobs market and the economic outlook.
"We expect Warsh to sound noncommittal at his first press conference. Partly because it’s his first press conference, and it would be a good idea to not sound too far from the committee’s views," said Jefferies economist Mohit Kumar. "If Warsh talks of (dis)inflationary pressures beyond the war, it would be a dovish signal for the market."
Market pricing reflects a widespread bet that rates will be held for much of the year, although futures indicate traders assign about a 43% probability of a 25-basis-point hike in December, according to CME Group’s FedWatch tool. Investors also had another macro print to consider: May retail sales data, due at 8:30 a.m. ET.
By 5:49 a.m. ET, S&P 500 e-minis were trading up roughly 8 points, or 0.11%. Nasdaq 100 e-minis had gained about 174 points, or 0.58%, while Dow e-minis were marginally lower by 12 points, or 0.02%.
U.S. stocks have recouped much of the early-June decline, with the Dow reaching record highs in the two most recent sessions. Market participants attributed the strength to a resilient U.S. economy, a widening of the rally beyond large-cap technology names and the fall in oil prices.
Oil hovered near a three-month low on hopes that an interim memorandum of understanding between the United States and Iran would ease the risk of supply disruption through the Strait of Hormuz. The memorandum - not yet public - reportedly extends an April ceasefire by another 60 days to provide space for negotiations toward a more permanent agreement.
Chipmakers saw notable premarket gains. Shares of Broadcom, Micron Technology, Advanced Micro Devices and Intel rose in the premarket, with increases ranging between 1.8% and 3.8%.
On the individual stock front, shares of SpaceX advanced 3.2% after the company surpassed Amazon’s market value on Tuesday to become the fifth most valuable company. La-Z-Boy's stock jumped 17% after the furniture maker reported fourth-quarter sales and profit that exceeded analysts' estimates.
Intraday market indications and selected tickers showed the uneven performance across sectors - the S&P 500 was down 0.57% in a referenced snapshot, while the Dow was up 0.64%. Notable movers in earlier trade included Intel lower by 8.45%, Micron down 6.18%, AMD off 7.3%, Broadcom down 4.37% and La-Z-Boy down 7.2% at one point in the session.
With the Fed announcement and Warsh’s remarks standing as the focal point for the day, investors continued to weigh the interplay between oil-market developments, inflation readings and consumer activity as signaled by upcoming retail sales figures.