From Yahoo Finance · · 1m 30s
Stock futures rise ahead of Fed rate hike decision
Markets brace for the Federal Reserve's first interest rate increase since 2023 as inflation remains sticky.
In brief
Markets brace for the Federal Reserve's first interest rate increase since 2023 as inflation remains sticky. The Fed is expected to raise rates by a quarter point on Wednesday, marking its first hike in three years amid persistent inflation concerns. Originally reported by Yahoo Finance.
Futures climb before Fed decision
S&P 500 futures gained 0.2%, Nasdaq-100 futures climbed 0.4%, and Dow Jones futures added 77 points as markets await Wednesday's 2 p.m. ET rate decision.
Fed expected to raise rates
Traders assign 92.5% probability to a quarter-point hike, the central bank's first increase since 2023. The current target rate range is 3.5% to 3.75%.
Inflation remains sticky despite cooling
Annual CPI stood at 3.4% in August, down from 4.2% in May, but core inflation topped estimates at 0.3% monthly. Energy costs are rising sharply.
Energy prices surge on supply constraints
U.S. diesel prices hit $6 per gallon for the first time on Friday due to supply constraints from conflicts in Ukraine and Iran. Brent crude fell 0.7% to $107.92 per barrel.
Holding rates steady poses risks
Brent Wilsey, chief investment officer at Wilsey Asset Management, warns that leaving rates unchanged could surprise markets and damage the Fed's credibility amid White House pressure.
“That could surprise stocks, and surprises are rarely received well in markets”
Tech sector pressured by AI concerns
Tuesday's session ended in the red with S&P 500 down 0.45% and Nasdaq down 0.78% after weekend conversations among AI leaders raised concerns about slowing product rollouts.
The big picture
The Fed is expected to raise rates by a quarter point on Wednesday, marking its first hike in three years amid persistent inflation concerns.
