The major U.S. index futures are currently pointing to a roughly flat open on Wednesday, with stocks likely to show a lack of direction after moving notably higher over the two previous sessions.
Traders may be reluctant to make significant moves ahead of the Federal Reserve’s highly anticipated monetary policy announcement this afternoon.
With the Fed widely expected to slow the pace of interest rate increases to 50 basis points, traders are likely to pay close attention to the accompanying statement for clues about the outlook for future rate hikes.
Recent data showing a slowdown in the pace of price growth has led to some optimism the Fed will not raise rates as high as previously feared.
The Fed is not likely to make any firm commitments, however, as a slew of key data will be released before the next monetary policy meeting in late January/early February.
Stocks gave back ground after an early rally on Tuesday but managed to finish the day mostly higher. The major averages added to the strong gains posted on Monday, further offsetting the steep drop seen last week.
After soaring by more than 700 points in early trading, the Dow briefly dipped into negative territory before closing up 103.60 points or 0.3 percent at 34,108.64. The Nasdaq jumped 113.08 points or 1.0 percent to 11,256.81, while the S&P 500 climbed 29.09 points or 0.7 percent to 4,019.65.
The early rally on Wall Street came following the release of a report from the Labor Department showing consumer prices in the U.S. inched up by less than expected in the month of November.
The Labor Department said its consumer price index crept up by 0.1 percent in November after climbing by 0.4 percent in October. Economists had expected consumer prices to rise by 0.3 percent.
Excluding food and energy prices, core consumer prices edged up by 0.2 percent in November after rising by 0.3 percent in October. Core prices were expected to show another 0.3 percent increase.
The report also showed the annual rate of growth by consumer prices slowed to 7.1 percent in November from 7.7 percent in October.
The year-over-year increase in November, which came in below economist estimates for a slowdown to 7.3 percent, reflects the slowest annual growth since December 2021.
The annual rate of growth by core consumer prices also slowed to 6.0 percent in November from 6.3 percent in October, while economists had expected price growth to slow to 6.1 percent.
Buying interest waned over the course of the morning, however, as traders seemed reluctant to make significant beats ahead of the Federal Reserve’s monetary policy announcement.
Oil service stocks turned in some of the market’s best performances on the day, driving the Philadelphia Oil Service Index up by 3.6 percent. The rally by oil service stocks came amid a sharp increase by the price of crude oil.
A jump by the price of gold also contributed to substantial strength among gold stocks, as reflected by the 2.6 percent surge by the NYSE Arca Gold Bugs Index.
Biotechnology, commercial real estate stocks and housing stocks also showed strong moves to the upside, closing higher along with most of the other major sectors.
Meanwhile, airline stocks came under pressure over the course of the session, dragging the NYSE Arca Airline Index down by 3.0 percent.
United Airlines (UAL) posted a steep loss after announcing an order for 100 of Boeing’s (BA) 787 Dreamliners with options to purchase 100 more.