Markets

U.S. stock futures on tenterhooks as ‘historic’ Fed decision looms

U.S. stock benchmarks looked set to see muted action Wednesday, with traders refraining from making big bets as they await the Federal Reserve’s next move.

Stock futures switched between small gains and losses in the early going. Futures for the Dow Jones Industrial Average












YMZ7, -0.04%










 were down 11 points, or 0.1%, at 22,327, while those for the S&P 500 index












ESZ7, +0.00%










 slipped less than a point or 0.20 point at 2,505. Futures for the Nasdaq-100 index












NQZ7, -0.04%










 fell 3 points, or 0.1%, to 5,994.

The subdued trading environment early comes after all three main benchmark posted small gains and ended at all-time highs on Tuesday. The Dow average












DJIA, +0.18%










climbed 0.2%, while the S&P 500












SPX, +0.11%










 and Nasdaq Composite Index












COMP, +0.10%










 both ended 0.1% higher.

“Financial markets are consolidating this morning, with all eyes on the Fed as the [Federal Open Market Committee] conclude their two-day meeting with the announcement of monetary policy,” said Richard Perry, market analyst at Hantec Markets, said in a note.

“This could be a historic meeting today. Even though there is no expectation of a rate hike, the meeting could include the official announcement that the Fed will begin to reduce the size of its balance sheet,” he added.

Read: Why stock market investors shouldn’t sweat a shrinking Fed balance sheet

Several central bank officials already wanted to start winding down the Fed’s $4.5 trillion portfolio of government securities in July, but the majority wanted to hold until a later date. Traders now expect the FOMC on Wednesday to reveal details on a balance-sheet reduction that will start in October.

The announcement is due at 2 p.m. Eastern Time, followed by a news conference with Chairwoman Janet Yellen at 2:30 p.m. Eastern.

“Any announcement that balance sheet normalization will begin shortly should have only a relatively muted impact on markets, given that the market largely expects it,” said analysts at Rabobank in a note.

“We therefore believe that any dollar strength as a result of the announcement should be limited,” they added.

The dollar traded lower against most other currencies ahead of the announcement. The ICE Dollar Index












DXY, -0.18%










 was down 0.2% at 91.654, falling for a second straight day.

In other economic news on Wednesday, a reading on existing-home sales for August is due at 10 a.m. Eastern Time. See:MarketWatch’s economic calendar

Stock movers: Shares of General Mills Inc.












GIS, -1.86%










 slid 4.6% after the food company, which brands include Cheerios, Haagen-Dazs and Betty Crocker, missed profit and sales expectations.

Alnylam Pharmaceuticals Inc.












ALNY, -1.26%










 soared 22% premarket after positive results in a late-stage trial.

Shares of American Outdoor Brands Corp.












AOBC, +10.10%










 climbed 0.3% in thin premarket trade, getting a boost from reports late Tuesday that President Donald Trump will ease rules on gun exports.

Bed Bath & Beyond Inc.












BBBY, -0.99%










 slumped 14% ahead of the bell after the retailer late on Tuesday released earnings that widely missed forecasts.

FedEx Corp.












FDX, +0.43%










 lost 1.4% premarket after the logistics company late Tuesday reported earnings below forecasts, saying the quarter offered “significantly operational challenges” due to a cyberattack and Hurricane Harvey.

Microsoft Corp.












MSFT, +0.37%










 slipped 0.2% even after the software major late Tuesday increased its dividend to 42 cents a share.

Other markets: Stocks in Europe were mostly higher, although the U.K.’s FTSE 100 index












UKX, +0.02%










underperformed due to a rise in the pound. Sterling












GBPUSD, +0.2294%










 strengthened after U.K. retail sales for August showed a bigger rise than expected.

Asian stocks closed mixed as traders there remained cautious ahead of the Fed call.

Oil prices












CLV7, +1.15%










 rose firmly, while metals gained across the board.

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