Market Snapshot: U.S. stock futures rise as market awaits what could be the biggest Fed rate hike since 2000

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U.S. stock futures moved higher on Wednesday, ahead of the outcome of a two-day Federal Open Market Committee meeting that is expected to deliver the first 50 basis-point interest rate hike since 2000.

Futures were moving higher alongside oil prices, up on news that the EU has proposed a ban on Russian oil.

How are stock-index futures trading?
  • Dow Jones Industrial Average futures
    YM00,
    +0.35%

    rose 117 points, or 0.3%, to 33,150

  • S&P 500 futures
    ES00,
    +0.40%

    rose 0.3% to 4,185

  • Nasdaq-100 futures
    NQ00,
    +0.34%

    rose 0.3% to 13,126

On Tuesday, the Dow industrials
DJIA,
+0.20%

rose 67.29 points, or 0.2%, to close at 33,128.79, the S&P 500 
SPX,
+0.48%

gained 0.5% to finish at 4,175.48. The Nasdaq Composite 
COMP,
+0.22%

added 0.2% to end at 12,563.76.

Read: ‘Bubble stocks popped’ but it’s still not safe to buy them, says Ray Dalio, founder of world’s biggest hedge fund

What’s driving markets?

Alongside a half-point interest rate hike, the Fed is expected to announce the start of “quantitative tightening” when the central bank’s decision is announced at 2 p.m. Eastern Time. Investors will also focus on a news conference with Fed Chairman Jerome Powell at 2:30 p.m. Eastern Time.

Read: Fed on track for biggest rate hike since 2000

Clarity from the Fed on size and scope of future rate increases could give beleagured stocks a lift, say some analysts.

“With financial conditions tightening ahead of the Fed’s interest rate decision, the Fed could be more dovish. Since the Fed’s last meeting, the 10-year yield topped 3% for the first time since 2018 (today), the U.S. dollar rallied 5%, the S&P 500 has fallen 8.74%, and hedge fund exposures fell to a 1.5-year low,” said the Saxo Bank strategy team, in a note to clients.

A slightly more dovish Fed could lead to a short-term rally for hard-hit tech and cyclical stocks, they said. “Keep in mind though, the longer-term picture is still very bearish, medium and longer-term, as the Fed is taking out $1 trillion a year out of the system and the economy is expected to slow,” said Saxo strategists.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
2.959%

was steady at 2.957%, while that of the 2-year
TMUBMUSD02Y,
2.780%

was up 2 basis points to 2.776%.

Ahead of Friday’s nonfarm payroll data, investors will get the ADP private-sector employment report at 8:15 a.m. Eastern Time, a March update on the trade balance, due at 8:30 a.m., followed by the Institute for Supply Management’s April services index at 10 a.m. Eastern.

Oil was also in focus, with prices for both Brent
BRN00,
+3.72%

BRNN22,
+3.72%

and West Texas Intermediate crude
CL00,
+3.81%

CL.1,
+3.81%

CLM22,
+3.81%

up over 3% each after the European Union proposed banning Russian oil imports under a phased six-month plan, and refined products within a year.

The move would be part of a sixth batch of EU sanctions against Russia over its invasion in Ukraine that began in late February.

Investors will get a fresh batch of earnings on Wednesday, with Moderna Inc.
MRNA,
+3.14%

and Yum Brands Inc.
YUM,
-0.60%

among those reporting ahead of the open. After the close, results are expected from eBay Inc.
EBAY,
+0.58%

and Etsy Inc.
ETSY,
+3.56%
,
among others.

Which companies are in focus?
How did other assets fare?
  • The ICE U.S. Dollar Index 
    DXY,
    -0.05%
    ,
     a measure of the currency against a basket of six major rivals, was down 0.3%.

  • Gold futures 
    GC00,
    -0.17%

    slipped, with gold for June delivery 
    GCM22,
    -0.17%

    eased modestly to to $1,869.50 an ounce.

  • Bitcoin 
    BTCUSD,
    +3.63%

    was up 1.8% at $38,993

  • In European equities, the Stoxx Europe 600 
    SXXP,
    -0.52%

    fell 0.5%. London’s FTSE 100 
    UKX,
    -0.56%

     dropped 0.5%.

  • In Asia, the Hang Seng Index 
    HSI,
    -1.10%

    fell 1.1% in Hong Kong, while many other Asian markets remained closed for a holiday.