US pre-open: Stocks to slip ahead of Fed announcement
US futures pointed to a weaker open on Wall Street on Thursday following solid gains in the previous session, as the focus shifted to the latest policy announcement from the Federal Reserve.
At 1220 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.2% and 0.4%, respectively, while Nasdaq futures were 0.5% lower. Stocks rose sharply on Wednesday, with the Dow closing up more than 500 points as investors welcomed the outcome of the US mid-term elections.
Oanda analyst Craig Erlam said the post-election bounce was strong but short-lived.
"The Fed meeting was always the lesser of the two risks but investors will still be following it extremely closely. Interest rates remaining unchanged is almost inevitability but the statement that follows will be pored over for any indication that recent market volatility has in any way softened plans for hikes this year and next.
"It was Jerome Powell that appeared to be the catalyst for the recent stock market sell-off when he suggested that interest rates were not close to neutral and could become restrictive, which got investors worried about the economic ramifications of such a move. The Fed may seek to clarify this in the statement today, although given the lack of a press conference I wonder whether they will instead hold off and see if the situation settles down on its own."
Erlam said it would make much more sense, given the recovery we’ve seen in the market, for the Fed to address the interest rate path in December when it is widely expected to raise again.
"This would give them the opportunity to clarify anything in the press conference that follows and lay out clear plans, alongside the dot plot, for the coming years. Instead today it may just emphasise the cautious and gradual approach to rate hikes."
In corporate news, shares in electric car maker Tesla were likely to be active as it named Australian executive Robyn Denholm as its new chairman after founder Elon Musk was forced to give up the role.
Housebuilder D.R. Horton was also likely to be in focus after posting a 49% jump in quarterly profit on the back of solid demand.
Elsewhere, telecommunications equipment manufacturer Arris International surged 10% in pre-market trade after agreeing to be bought by CommScope Holding in a $7.4bn deal.
Healthcare services group Cardinal Health was on the front foot ahead of the opening bell after better-than-expected first-quarter earnings per share, while medial holding company Gannett could be active after its third-quarter earnings.
The Fed announcement is at 1900 GMT but before that, initial jobless claims will be released at 1330 GMT.