- US stock futures slid on Wednesday as Wall Street waited for the Fed's interest-rate decision.
- Investors are eager to see Fed officials' latest projections for rate cuts this year.
- Luxury giant Kering's shares tanked 15% after warning of a big slide in Gucci's first-quarter sales.
Stocks were set to drop on Wednesday as traders eagerly awaited the outcome of the Federal Reserve's two-day policy meeting this week.
S&P 500 and Nasdaq 100 futures were down about 0.1% shortly after 5:30 a.m. ET, while Dow Jones Industrial Average futures were roughly flat. The key 10-year Treasury yield was almost unmoved at 4.28%, while the US Dollar Index – which measures the buck against a basket of world currencies — was up 0.6% at 104 points.
Across the pond, Kering shares slumped 15% after the French luxury behemoth warned that sales at its key Gucci brand were on track to slide nearly 20% this quarter, partly because of a slowdown in the Asia-Pacific region. The sell-off wiped the euro equivalent of $7 billion from its value.
Wall Street was focused on whether the Fed would keep its benchmark interest rate at 5.25% to 5.5% for a fifth straight meeting, and if it would ease off from shrinking its balance sheet in response to cooler inflation.
Traders were also keen to find out where the central bank sees rates going this year, as those projections are published on a graph known as the "dot plot" after each Fed meeting.
"The Fed will most probably keep the rates unchanged today, update its dot plot, and maybe give a hint on whether they will start slowing QT," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, in a morning note.
"Given the recent uptick in inflation, strong economic growth, healthy jobs market, and robust earnings, we could see some Fed members plot fewer rate cuts for the year and the latter could tilt the median forecast to two rate cuts this year from three plotted in December."
Investors are watching the Fed's every move because a clear signal of impending rate cuts would be a boon for risk assets like stocks.
Lower rates would encourage spending over saving and lower borrowing costs, likely boosting corporate profits by lifting demand, reducing interest expenses, and stimulating the economy. They would also increase the relative appeal of stocks by reducing the guaranteed returns offered by Treasury bonds and savings accounts.
Micron Technology, General Mills, and Five Below are among the companies scheduled to report earnings later. The Fed's rate decision and Chair Jerome Powell's accompanying press conference are the key events on the economic calendar.