U.S. stock futures bounce back ahead of Fed decision as investors give a pass to earnings misses from Alphabet and Microsoft

U.S. stock futures rose on Wednesday, climbing ahead of a Federal Reserve rate decision where the focus will be on how aggressive the central bank thinks it needs to be to get inflation under control.

What’s happening
  • Futures on the Dow Jones Industrial Average
    YM00,
    +0.42%

    rose 161 points, or 0.5%, to 31893.

  • Futures on the S&P 500
    ES00,
    +0.87%

    gained 39.25 points, or 1%, to 3963.

  • Futures on the Nasdaq 100
    NQ00,
    +1.44%

    increased 195.5 points, or 1.6%, to 12308.

On Tuesday, the Dow Jones Industrial Average
DJIA,
-0.71%

fell 229 points, or 0.71%, to 31762, the S&P 500
SPX,
-1.15%

declined 46 points, or 1.15%, to 3921, and the Nasdaq Composite
COMP,
-1.87%

dropped 220 points, or 1.87%, to 11563. Walmart’s
WMT,
-7.60%

profit warning helped set the tone for a down day on Wall Street.

What’s driving markets

The Fed decision is due at 2 p.m. Eastern, with a press conference from Fed Chair Jerome Powell at 2:30 p.m. Expectations are for a 75 basis point hike, but there’s uncertainty on what the Fed’s message will be, and whether it lines up a pivot after a string of negative economic surveys from both companies and consumers.

Tim Duy, chief U.S. economist at SGH Macro Advisors, says the central bank will want to send a hawkish message but might find it hard to accomplish.

“The easy path to sending that message is to set up another 75bp hike in September, but I don’t think the Fed will to do that if, as I suspect, the goal is to reduce the level of guidance while creating a hawkish path that does not require an additional super-sized hike,” said Duy. “It might be a tricky space to navigate; we have always said the Fed will face a communications challenge when it comes time to set the stage for stepping down from 75bp.”

Durable-goods orders and pending home sales reports also are set for release.

Alphabet
GOOGL,
-2.32%

and Microsoft
MSFT,
-2.68%

each missed earnings expectations, though shares of both were up in premarket trade. Plane maker Boeing
BA,
-0.46%

and, after the close, Facebook parent company Meta Platforms
META,
-4.50%
,
are among the wave of companies set to report results on Wednesday.

“Solid reports from tech giants Microsoft and Alphabet have given a fresh boost to market sentiment on Wednesday, sparking hopes that companies can handle tighter monetary conditions and a slower economy,” said Pierre Veyret, technical analyst at ActivTrades.

Also in Washington, the Senate is expected to vote on a bill to boost U.S. semiconductor production.

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