Wall St poised for higher open ahead of Fed meeting outcome

Following a selloff in the previous session, Wall Street’s main indexes were set to open higher on Wednesday, with investors anticipating more economic data ahead of the outcome of a Federal Reserve policy meeting later in the day.

Major U.S. stock indexes fell more than 1% on Tuesday, as regional bank shares fell on increased concerns about the banking system and investors attempted to measure how much longer the Fed may need to raise interest rates.

Regional lenders such as PacWest Bancorp and Western Alliance Bank extended losses in premarket trading on Wednesday, with their shares down 2% and 1%, respectively.

While the Fed is widely expected to deliver a 25-basis point interest rate hike, investor focus will be on cues if further hikes are on the cards given inflation remains above the U.S. central bank’s 2% target level.

“The Fed may want to deliver as little in the way of guidance as possible, keeping the door open for a pause or even an additional hike,” Saxo Bank analysts said.

Major global central banks have embarked on an aggressive interest rate hike campaign to tackle sticky inflation, with the Fed already having hiked its benchmark rates nine times by 475 basis points to a range of 4.75%-5.00% since March 2022.