Futures Hold Steady Ahead of Fed Decision; Tesla Faces Pre-market Slip

Stocks show modest movements as investors await the Federal Reserve's interest-rate decision. The focus is on potential warnings from Chair Jerome Powell regarding market expectations of policy easing being overstated.

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S&P 500 and Nasdaq 100 contracts suggest modest gains on Wall Street. In pre-market activity, Tesla Inc. experiences a 1.4% drop following the recall of over 2 million vehicles to address autopilot safety issues. In Europe, the Stoxx 600 index edges higher, with Inditex SA gaining ground after a positive gross margin forecast.

The pound depreciates, and UK bonds rise as data reveals a larger-than-expected economic contraction in October. This prompts increased speculation of Bank of England interest-rate cuts next year. The dollar and Treasuries see marginal gains.

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Globally, attention is on the conclusion of the Fed's final policy meeting of 2023. While the central bank is expected to maintain its current stance, recent US inflation data has cast doubts on the likelihood of a more aggressive pivot toward policy easing.

"The market doesn't agree with the Fed about inflation, so I expect some pushback from Powell, but no game-changer really," says Francois Rimeu, a strategist at La Francaise Asset Management in Paris.

The S&P 500, reaching its highest since January 2022 on Tuesday, has rallied approximately 10% since the last Fed meeting on Nov. 1. Treasury yields have decreased on speculations of over a full percentage point of rate cuts next year.

With the Fed likely keeping its target rate range steady at 5.25% to 5.5%, Powell's signals on the policy path and updates to quarterly forecasts will be closely scrutinized. The market, having outpaced the central bank's current forecast, may encounter uncertainty based on the Fed's outlook for rate policy in 2024 and 2025 via its "dot plot."

Elsewhere, Argentina devalues the peso by 54%, implementing spending cuts as part of President Javier Milei's shock-therapy program to revive the nation's economy. The central bank now targets a 2% monthly currency devaluation.

Oil trades near the lowest levels since June due to signals suggesting supply exceeds consumption.

In Asia, Chinese stocks lead a regional selloff after a leadership meeting disappoints investors with a lack of robust economic support measures.

Key events for the week include the US PPI, Federal Reserve policy meeting, European Central Bank policy meeting, Bank of England policy meeting, and Swiss National Bank policy meeting, among others.

Market Movements:

Stocks:

• S&P 500 futures rose 0.1%

• Nasdaq 100 futures rose 0.2%

• Dow Jones Industrial Average futures were little changed

• Stoxx Europe 600 rose 0.2%

• MSCI World index was little changed

Currencies:

• Bloomberg Dollar Spot Index rose 0.1%

• Euro was little changed at $1.0784

• British pound fell 0.4% to $1.2519

• Japanese yen fell 0.2% to 145.68 per dollar

Cryptocurrencies:

• Bitcoin rose 0.2% to $41,172.36

• Ether rose 0.4% to $2,181.28

Bonds:

• Yield on 10-year Treasuries declined two basis points to 4.18%

• Germany's 10-year yield declined three basis points to 2.19%

• Britain's 10-year yield declined 10 basis points to 3.87%

Commodities:

• West Texas Intermediate crude rose 0.5% to $68.92 a barrel

• Spot gold was little changed.

Also Read: What to Expect in December: 3 Things That Could Affect the Stock Market