US futures
Dow futures 0.12%, S&P 500 futures 0.0% & Nasdaq futures 0.1%
European futures
FTSE 0.16%, DAX 0.2%
- US stocks are flat after two days of gains
- Tech sentiment remains supported by SK Hynix earnings
- Alphabet and Microsoft earnings after the close
- Oil prices jump 1% on Saudi Arabia energy infrastructure hit
U.S. stocks cautiously ahead of Fed decision and tech earnings
U.S. stocks are rising cautiously ahead of the Federal Reserve interest rate decision later today, as well as key tech earnings after the close.
Attention is turning to the FOMC rate decision later today, where the Fed is widely expected to leave interest rates unchanged at 3.75%–4%. With the move 90% priced in, attention will be on the vote split and Federal Reserve Chair Kevin Warsh's comments at the press conference.
The meeting comes with inflation in the U.S. at 3.7% year on year, although updated PPI data for September will be released tomorrow. Core CPI has risen to 2.6%, giving the Fed some leeway rather than forcing it into back-to-back hikes.
How the 12 committee members vote will be important. Any dissenters voting for an immediate hike could further support the case for a December rise.
Federal Reserve Chair Kevin Warsh's comments will be scrutinised for clues about the pace of further rate hikes. Comments highlighting concerns over inflationary pressures could support a hawkish bias.
While a hawkish hold is the base case, a more hawkish vote and comments from Warsh signalling that further hikes are needed could cement December rate hike expectations, which are currently around 84%. The market reaction would likely be higher Treasury yields and a stronger U.S. dollar, potentially weighing on stocks.
Conversely, a neutral vote, with all 12 committee members voting against an immediate hike, combined with a more neutral stance from Warsh, could pull Treasury yields lower and lift stocks.
Corporate movers
SK Hynix ADRs are pushing higher after impressive numbers from the South Korean chipmaker. SK Hynix posted an operating profit increase of 632% compared with a year ago. Meanwhile, revenue came in at $78.86 billion, equivalent to U.S. dollars, well ahead of forecasts and up 327% from a year earlier. The earnings are helping revive optimism towards chipmakers. Memory chipmaker Micron Technology trades 3.6% higher.
Data storage firms such as SanDisk and Western Digital are up 4.1% and 1.4%, respectively.
Alphabet is due to report after the close. The market will be looking for growth in the business areas where Alphabet's AI spending should show up most clearly, especially cloud. Investors will also want reassurance that Search growth is holding up as AI agents change how people look for information. The capex outlook will be crucial. Strong cloud growth could support Alphabet shares, while a surge in spending without a matching revenue story could revive capex fears.
Microsoft will also report after the close. Azure growth and Copilot monetisation are closely tied to whether Microsoft's AI spending is paying off. Investors will want to see that demand remains strong enough to justify the enormous spending.
S&P 500 forecast – technical analysis
After once again finding support at the 7,620 level, the S&P 500 has rebounded, pushing above the 50 EMA and the rising trendline to 7,730. Should momentum continue to build, buyers will look to extend gains above 7,750 to bring 7,840 into focus and potentially reach fresh record highs.
The 7,620 level is key support. Should sellers break below here, that would open the door to 7,500 before exposing the 200 EMA at 7,350 and the July low at 7,300.
FX markets – USD rises, GBP/USD falls
The U.S. dollar is rising ahead of the Federal Reserve interest rate decision, where the central bank is expected to leave rates unchanged but could signal a December hike. The market is pricing in an 84% probability of a hike at the end of the year. A hawkish hold could keep the U.S. dollar supported.
EUR/USD is falling ahead of the ECB rate decision tomorrow, where the central bank is expected to leave interest rates unchanged. While inflation is up at 3.8%, well above the 2% target, fiscal and political turmoil in France has lifted borrowing costs across Europe, doing some of the heavy lifting for the central bank. The market is pricing in around an 84% probability of a December hike.
GBP/USD is under pressure below 1.33 after the Chancellor's Budget, where the OBR upwardly revised growth for 2026 to 1.2%, up from 1%, while downgrading growth for 2027 to 1%. Overall, the Budget was a non-event for sterling and the gilt market, with Healey tinkering around the edges rather than announcing any major changes to tax or spending.
Oil jumps 1% on Saudi Arabia energy infrastructure hit
Oil prices have jumped 1% on Wednesday after an attack on a refinery in Saudi Arabia revived concerns about supply risks owing to the conflict in the Middle East.
Yemen's Iran-aligned Houthis hit Saudi Arabia's largest oil refinery with a missile. With strikes against Saudi Arabia intensifying, the market is pricing in greater risks of supply disruption.
The geopolitical risk premium remains high amid little clarity over what Trump's next move towards Iran will be.
Crude oil stockpiles have eased, falling by 2.03 million barrels against expectations of a 15,000-barrel build.
The OPEC meeting on Sunday is expected to see oil producers keep their December oil output targets unchanged.
