Wednesday December 14th


Stock futures are muted as investors await the Federal Reserve’s rate decision

U.S. stock index futures were little changed Wednesday as investors awaited the Federal Reserve’s latest interest rate hike decision in its effort to crush inflation. Dow Jones Industrial Average futures dipped 2 points, or less than 0.1%. Futures tied to the S&P 500 and Nasdaq 100 were also roughly flat. The Fed will conclude its December meeting and is expected to deliver a 50 basis-point rate hike. That’s a smaller bump after four consecutive 75 basis point hikes. A basis point is equal to one hundredth of one percent. Chair Jerome Powell will also speak Wednesday, giving further clues about what’s coming from the Fed in 2023. In previous meetings this year, traders have been sensitive to Powell’s language, interpreting his tone as hawkish or dovish. “While we expect the Fed to slow the pace of rate rises at its Wednesday meeting, policymakers are likely to stress that the job of curbing inflation is not yet over,” UBS’ Mark Haefele wrote in a Wednesday note. “A slowing of job creation and wage growth will be needed before the Fed can stop hiking.” Stocks rose for a second day Tuesday, fueled by a cooler-than-anticipated inflation report. The November consumer price index was 7.1% on the year, less than the 7.3% gain expected by economists surveyed by Dow Jones. The 0.1% increase from the previous month was also less than forecast. The signal that inflation may have peaked was positive for stocks as it means the Fed may be one step closer to halting interest rate hikes or switching to cuts, which would fuel equities. Asia-Pacific markets traded higher on Wednesday, after stocks on Wall Street saw a second day of gains on an inflation print that came in cooler than expected. The Hang Seng index in Hong Kong rose 0.6% in its final hour of trade. In mainland China, the Shenzhen Component fell 0.2% and the Shanghai Composite was also down 0.1% as traders watched for updates on a key economic policy meeting that has reportedly been delayed on a surge of Covid infections. In Japan, the Nikkei 225 gained 0.72% to 28,156.21 while the Topix was 0.6% higher to 1,977.42. South Korea’s Kospi also rose 1.13% to 2,399.25. In Australia, the S&P/ASX 200 was 0.67% higher to 7,251.3. Oil prices rose Wednesday as bearish signals from data indicating a surprise build in U.S. crude inventories were more than offset by forecasts of oil demand rebounding over 2023 from OPEC and the International Energy Agency (IEA). Brent crude futures rose 99 cents, or 1.2%, to $81.67 per barrel, while U.S. West Texas Intermediate (WTI) crude futures gained $1.06 to $76.45. U.S. crude inventories rose 7.8 million barrels in the week to Dec. 9, according to market sources citing data from the American Petroleum Institute, while analysts polled by Reuters had expected a 3.6 million barrel drop. Gold prices held above the $1,800 per ounce pivot on Wednesday as signs of cooling U.S. inflation lifted expectations the Federal Reserve will adopt a less aggressive policy stance later in the day. Spot gold was little changed at $1,807.24 per ounce. U.S. gold futures eased 0.4% to $1,818.80. Gold price rose as much as 2.4% to their highest level in more than five months on Tuesday after data showing a smaller-than-expected rise in U.S. consumer prices sent the dollar tumbling.