Stock futures rose Wednesday following another wild session for the market as investors await the results from a Federal Reserve meeting expected to set the tone for 2022.
Dow Jones Industrial Average futures climbed about 315 points, or 0.9%. S&P 500 futures added 1.2%. Nasdaq 100 futures gained 1.7%.
Microsoft shares rose 3.5% in early morning trading after the company issued better-than-expected quarterly revenue guidance. Moderna rallied 4.6% in the premarket, rebounding after falling for eight straight days. Dow component Boeing was up 2.6% premarket ahead of its 7:30 a.m. ET earnings report and after a report that the airliner is in talks with Qatar Airways for a 777 order. Tesla shares popped 4.4% ahead of its earnings report after the closing bell.
The Fed is slated to conclude a two-day policy meeting Wednesday, with an announcement coming at 2 p.m. ET. The central bank is not expected to make any policy changes, but investors will look for clues on when — and by how much — the Fed will raise interest rates later this year. Market participants will also look for hints on the next steps the Fed will take to further unwind the measures taken in 2020 to support the economy through the pandemic.
Recent market volatility is unlikely to deter the Fed from implementing up to four quarter-percentage-point interest rate hikes this year.
“While significant stock market volatility leading up to an FOMC meeting would normally weigh on Fed policy and commentary, that is not the case this time around, given the extreme levels of inflation seen in recent months,” said Danielle DiMartino Booth, head of Quill Intelligence and former advisor to then-Dallas Fed President Richard Fisher.
“Optically, it’s better for the Federal Reserve to ignore the stock market volatility, which is mainly affecting wealthy investors, and instead focus more on taming inflation, which is primarily affecting Main Street,” Booth added.
The Dow ended the regular trading day Tuesday down 66 points, or 0.2%. However, the 30-stock average was down as much as 818.98 points on the session and briefly traded up by as much as 226.54 points. Those moves came a day after the Dow recovered from a 1,115-point deficit to post a slight gain.
The S&P 500 and Nasdaq Composite also closed well off their session lows on Tuesday, but still lost 1.2% and 2.3%, respectively.
Anu Gaggar, global investment strategist at Commonwealth Financial Network, said she thinks this sharp volatility is a byproduct of investors bracing for tighter monetary policy from the Fed.
“The market is exhibiting withdrawal symptoms as it is dealing with the possibility of the removal of the Fed put,” Gaggar said. “It almost feels like the market is behaving a little incoherently, not knowing which way to go – go down because the Fed is tightening or go up because the Fed is finally acting to rein in inflation and is loading up on ammunitions while economic growth remains strong.”
“Between rate hikes and tapering the $9 trillion balance sheet, we could be looking at a monetary regime that is changing quickly,” Gaggar said.
Treasury yields have jumped sharply to start the year in anticipation of tighter monetary policy from the Fed. Last week, the benchmark 10-year note yield briefly broke above 1.9%. On Tuesday, the yield closed at 1.77% — that’s still more than 20 basis points above where it ended 2021. Yields nudged higher across the curve Wednesday morning, with the 10-year most recently at 1.79%.
On the data front, International trade numbers are slated for release Wednesday at 8:30 a.m. ET. New home sales data are set to come out at 10 a.m. ET.
The corporate earnings season also continues Wednesday, with Dow member Boeing and AT&T reporting before the bell. Tesla and Intel are scheduled to post their latest quarterly figures after the close.
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