U.S. stock index futures saw a rebound on Wednesday, following a dip in the previous session. This shift in momentum comes as investors eagerly await insights from Federal Reserve officials, aiming to decipher the central bank's future policy moves during a week with limited trading days.
The Dow Jones Industrial Average and the S&P 500 experienced their third consecutive day of losses on Tuesday. This downturn was largely due to the struggles of maintaining upward momentum, especially among major megacap companies.
Attention is particularly focused on Fed Board Governor Christopher Waller's scheduled speech at the Economic Club of New York. Waller, known for his hawkish stance, is expected to provide valuable commentary on recent data releases and their implications for future monetary policy.
Francesco Pesole, an FX strategist at ING, highlighted the anticipation around Waller's reaction to the latest data, noting that any changes in the Fed's June meeting expectations are unlikely unless Friday's Personal Consumption Expenditures (PCE) data brings surprises.
The PCE price index, a key inflation measure favored by the Fed, is set to be released on Friday, a day when U.S. markets are closed for Good Friday. Economists anticipate a 0.4% increase for February and a 2.5% rise on an annual basis. Core inflation is also expected to show a 0.3% increase from the previous month, maintaining an annual rate of 2.8%.
An unexpected rise in inflation could dampen the enthusiasm for early rate cuts, despite traders currently seeing a 70% chance of the Fed beginning its easing cycle in June, as per the CME FedWatch tool.
All three major U.S. stock indexes are on track for quarterly gains, buoyed by an AI-driven rally that propelled Wall Street to record highs. This optimism is further supported by hopes of the Fed reducing borrowing costs later this year.
Early trading saw Dow e-minis up by 136 points (0.34%), S&P 500 e-minis increasing by 18 points (0.34%), and Nasdaq 100 e-minis rising by 69 points (0.37%). Notably, most megacap growth stocks, including Tesla (up 1.2%) and Nvidia (up 1.0%), showed pre-market gains.
Merck & Co surged 4.9% following the FDA's approval of its high blood pressure therapy. Trump Media & Technology Group also saw a significant jump of 12.0% after its impressive Nasdaq debut.
Robinhood Markets climbed 6.5% after announcing a new credit card, while GameStop faced a 15.3% decline after reporting lower fourth-quarter revenue and job cuts to reduce costs.
