Stock futures fall ahead of Fed move

Equity futures opened lower on Tuesday night as investors eagerly awaited the arrival of the Federal Reserve’s latest monetary policy decision after a volatile start to the week.

S&P 500 contracts fell ahead of the decision. FedEx (FDX) shares fell late in the session after the shipping giant posted weaker-than-expected quarterly profits as supply chain disruptions and labor shortages weighed on businesses. results. Disney (DIS) shares extended their earlier losses after CEO Bob Chapek, at a Goldman Sachs conference on Wednesday, released a weaker-than-expected outlook for streaming subscribers and said he was expected production delays to affect the current quarter’s results.

For markets, the Fed’s latest move will be one of the flagship events of this week, redirecting attention to national monetary policy after fears of fallout from the potential default of Chinese real estate giant China Evergrande that sparked the worst day. shares since May earlier this week.

The monetary policy statement and subsequent press conference by Fed Chairman Jerome Powell on Wednesday afternoon is expected to lay the groundwork for a near-term announcement and begin to gradually scale back the asset purchase program of the Fed in times of crisis, which currently includes purchases of $ 120 billion per month. in agency mortgage-backed securities and in US Treasury bills.

The anticipation of the cut has been a source of consternation for market participants in recent months as the central bank intensified its talks on starting the removal of one of the main sources of support to the economy. hit by the pandemic.

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“I think overall the Fed is still moving forward. They’re going to tell us that they’re about to decrease this year, or their plan is still to decrease this year. That defines November or maybe December as a official announcement, “Julia Coronado, president of MacroPolicy Perspectives, told Yahoo Finance on Tuesday. “So it’s really not about doing anything, it’s just about reminding ourselves that the economy is moving forward, the recovery is on and the Fed is going into a very gradual process of normalization, as they like. in other words, monetary policy. “

The policy decision will also be accompanied by an update of the economic projections of the members of the Federal Open Market Committee (FOMC), including a first look at their expectations for 2024. Based on the latest projections from the central bank in June , the FOMC’s dot plot, or graph of interest rate expectations, suggested that the middle member expects two rate hikes by the end of 2023. However, given improvements in the economic recovery Since then, some experts expect more FOMC members to push ahead with their planned timeline for the interest rate hike next year. rates from their current levels close to zero.

“[Wednesday’s] dot plot will likely show more points for a rate hike in 2022, but it’s not clear that progress since the June meeting has been enough to push three other FOMC members – making a majority – to expect action next year, ”Ian Shepherdson, chief economist for Hall of Fame Macroeconomics, wrote in a note.

“Moreover, the Delta wave had barely started by the time of the June FOMC meeting,” he added. “Overall, we expect the midpoint to still indicate that rates are more likely to rise for the first time in 2023, but it will be close, and ultimately we still think the Fed will start moving there. ‘next year.”

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6:15 p.m. ET Tuesday: Stock futures trading is mixed after the sell-off

Here are the main movements on the markets as of Tuesday evening:

• S&P 500 Futures Contracts (ES = F): -4.75 points (-0.11%), to 4,338.5

• Dow Futures (YM = F): -37 points (-0.11%), to 33,761.00

• Nasdaq Futures (NQ = F): -31 points (-0.21%) to 14,993.00

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter