US stock futures rise sharply after another day of wild volatility, with all eyes on the Fed decision
- US stock futures rose sharply Wednesday as focus turned to the Federal Reserve decision due later.
- The Fed is expected to hold interest rates steady but make clear that it intends to hike in March.
US stock futures rose sharply Wednesday after another volatile day on Wall Street that saw equities tumble, as
The Fed's two-day meeting ends Wednesday, and its chair Jerome Powell is scheduled to speak at 2.30 p.m. ET to share the latest monetary policy decision.
The world's most important central bank is expected to leave interest rates on hold, but signal that it intends to hike them in March, for the first time since 2018.
Analysts said Powell is also likely to confirm that the central bank's bond purchases will end in March.
Yet his statement could trigger more volatility in markets if the Fed comes across as more "hawkish" — that is, keen to raise interest rates faster and harder — in its approach to inflation.
On the other hand, the meeting "will provide some much-needed clarity on where the Fed officials' heads are," said Anu Gaggar, global investment strategist for Commonwealth Financial Network.
"Removal of some uncertainty could, in fact, be welcomed by the markets. I believe a rate hike in March is already baked in, but the market is looking for more clarity on balance sheet tapering," he added.
Markets broadly expect the Fed to increase interest rates four times in 2022, leaving the key federal funds rate at around 1% to 1.25% by the end of the year, from next to zero currently.
Investors' concerns about Fed policy, fourth-quarter earnings, and tensions in Eastern Europe have all knocked stocks in recent days.
The S&P 500 finished 1.22% lower Tuesday, having come back from a deeper fall earlier in the session. The benchmark stock index is now down more than 8% so far this year, as investors get to grips with the Fed's plans to turn off the stimulus taps.
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Bond yields edged higher after broadly rising Tuesday. The yield on the key 10-year US Treasury note, which moves inversely to the price, rose slightly to 1.788%.
Moves in longer-dated bond yields have been relatively muted in recent days, reflecting some investors' concerns that the Fed could move too far and curtail economic growth.
Traders will also be keeping a close eye on companies' reports as the quarterly earnings season continues.
Microsoft shares initially fell in after-hours trading Tuesday after the tech giant released its results. But the stock then rallied as investors warmed to Microsoft's upbeat financial forecast for the coming months. It beat earnings expectations, booking $2.48 per share in its fiscal second quarter.
Elsewhere in markets, bitcoin's rebound continued, with the token up 3.8% to $37,534 on the Coinbase exchange. It had tumbled as low as $33,000 on Monday, way down from its November record high of close to $69,000.
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