Stock Futures Waver Ahead of Fed Decision

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U.S. stock futures edged higher, with the Federal Reserve poised to raise its benchmark interest rate Wednesday. 

Futures for the S&P 500 added 0.3% Wednesday. Contracts for the tech-focused Nasdaq-100 rose 0.2% and futures for the Dow Jones Industrial Average edged up 0.2%. U.S. stock indexes finished modestly higher on Tuesday.

Fed officials have signaled they could raise interest rates by a half percentage point and approve plans to start shrinking the central bank’s $9 trillion asset portfolio when they release their monetary policy decision at 2 p.m. ET. The Fed lifted rates by a quarter percentage point in March to a range between 0.25% and 0.5%.

The moves are part of a double-barreled effort to slow the economy and ease inflation, which is running at a four-decade high. At the same time, investors are worried that aggressive interest-rate increases by the Fed could tip the economy into recession, necessitating future rate cuts. Investors will parse comments from Fed Chairman Jerome Powell Wednesday afternoon for indications of how much the central bank may raise interest rates this year.

“This is the question markets are dealing with: Where is the Fed going? Is it really this series of rate hikes going to 5% or 6% that will end in the cooling of the economy?” said Carsten Brzeski, ING Groep’s global head of macro research.

Investors were also monitoring earnings for signs of whether inflation is eating away at profits or weighing on consumer spending. Results are due ahead of the market open from CVS Health, Marriott International, Moderna, Regeneron Pharmaceuticals and Uber Technologies.

In premarket trading, Airbnb shares rose more than 4% after the company said it expects to post its first full-year net profit this year. Starbucks shares added 4% after the coffee chain said profits and sales grew in the most recent quarter. 

Lyft shares slumped more than 25% after the ride-hailing company said it would invest in the current quarter to ensure adequate driver supply and grow its ride-hailing platform, spooking investors as the spending weighs on operating profit.

Traders worked on the floor of the New York Stock Exchange on Monday.

Photo: Spencer Platt/Getty Images

In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 2.970% from 2.957% Tuesday. 

In commodities, Brent-crude futures prices rose 2.8% to $107.89 a barrel. Concerns about reduced energy supply stemming from Russia’s war against Ukraine have kept prices elevated in recent months. The European Union proposed a ban on imports of Russian crude oil within six months and a ban on refined oil products by year-end, European Commission President Ursula von der Leyen said Wednesday.

Overseas, the pan-continental Stoxx Europe 600 edged down 0.4%. Hong Kong’s Hang Seng fell almost 1.2%, and South Korea’s Kospi edged down 0.1%. Markets in mainland China and Japan were closed for a holiday.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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