S&P 500, Nasdaq futures rise in run-up to Fed rate verdict By Reuters

(Reuters) -The and Nasdaq futures edged higher on Wednesday as investors overwhelmingly expect the Federal Reserve to pause its monetary tightening campaign later in the day.

The U.S. central bank is expected to leave interest rates steady at the 5%-5.25% range, unchanged for the first time since it kicked off a historically aggressive round of policy tightening in March 2022.

Traders see a 95% chance the Fed will hold rates at the current levels, but have priced in 63% odds of a 25-basis-point hike in July, according to the CME Fedwatch tool.

“Assuming the Fed does pause, it’s possible the Fed’s statement could include wording designed to stamp out expectations that a pause may lead to a cut,” said Richard Flynn, UK Managing Director at Charles Schwab (NYSE:).

The central bank is scheduled to release its policy statement and new quarterly economic projections at 2 p.m. EDT (1800 GMT), followed by Chair Jerome Powell’s news conference.

U.S. stocks have rallied in recent weeks, pushing the benchmark S&P 500 and Nasdaq to 14-month highs, boosted by signs of economic resilience, an upbeat earnings season and hopes that interest rates were near their peak.

While megacap technology stocks have driven much of the gains this year, economically sensitive small-cap shares as well as material and banking sectors have joined the rally recently.

After Tuesday’s data showed consumer prices barely rose in May, investors are now focused on producer prices reading that is expected to show they fell 0.1% last month. The data is due at 8:30 a.m. ET.

At 7:16 a.m. ET, were down 42 points, or 0.12%, were up 7 points, or 0.16%, and were up 17.75 points, or 0.12%.

In individual stocks, Advanced Micro Devices (NASDAQ:) rose 2.6% premarket after Reuters reported that Amazon Web Services was considering using the company’s artificial intelligence chips. Amazon.com (NASDAQ:)’s shares edged up 0.4%.

Tesla (NASDAQ:) Inc added 2.0% as the electric-vehicle maker slightly increased the price of its Model Y car in the United States.

United Health Group fell 4.8% after the health insurer warned of a spike in medical costs in the second quarter as more older adults undergo non-urgent procedures they had delayed during the pandemic.

Shares of CVS Health (NYSE:) and Humana (NYSE:) also fell in thin trading.