Nasdaq, S&P, Dow futures stumble ahead of Fed’s decision on post-earnings declines (SPX)

Stock index futures were lower Wednesday following disappointing earnings reports postmarket Tuesday and with the Fed decision in view.

S&P 500 futures (SPX) -0.4%, Nasdaq 100 futures (US100:IND) -0.7% and Dow futures (INDU) -0.2%.

AMD (AMD), Super Micro (SMCI) and Starbucks (SBUX) weighed on futures following earnings reports, while Amazon (AMZN) lent some support.

Super Micro Computer (SMCI) was down 9.5% as it missed its quarterly revenue estimates. AMD (AMD) also slipped by 6.5% in premarket trade, after the semiconductor firm reported first-quarter results and guidance that were largely in-line with expectations.

The 10-year Treasury yield (US10Y) rose 2 basis points to 4.70%. The 2-year yield (US2Y) was unchanged at 5.04%.

The Fed’s two-day meeting will conclude today, and the FOMC is expected to announce its policy decision at 2:00 pm ET, with Powell’s press conference scheduled for 2:30 pm ET. It is widely accepted that rates will be held steady, but investors will be eagerly waiting for the press conference to look for hints on the Fed’s path in the year.

“In terms of the Fed’s decision, it’s widely expected that they’ll leave rates unchanged today. But given the recent inflation data, our US economists think there’ll be a more hawkish-leaning message, echoing chair Powell’s view that it will take longer to gain confidence about disinflation,” said Deutsche Bank’s Jim Reid.

“The key market-moving moment will likely be when Fed Chair Powell is probed on how the economy and inflation are evolving relative to the FOMC’s expectations of three cuts,” said Steve Englander of Standard Chartered.

Englander expects a formulation that says the FOMC still broadly sees policy rate cuts as the base case for its next move, but there is no hurry on such cuts.

“The assumption is that chair Powell will pour cold water on hopes of near-term policy easing and concede that inflation is above target and sticky while growth is resilient,” said Kit Juckes, FX strategist, Societe Generale.

“Chair Powell is unlikely to slam the door definitively on a June rate cut at his press conference today, but he will leave markets in no doubt that the data over the next six weeks would have to be extraordinary in order to push the FOMC into action,” said Pantheon Macroeconomics.

The economic calendar is on the heavier side today, with the April ADP jobs report due before the bell. Economists expected a fall to 179K in private payrolls.

The April PMI manufacturing index is expected a little after the market opens, and is forecasted to drop to 49.9. ISM manufacturing PMI is also due during market hours.

Pantheon Macro also advised traders to ignore the ADP job report, and expect a soft ISM.

The job openings and labor turnover survey, or JOLTS, will hit during market open, and openings are expected to fall to 8.680M.

“The broader trend remains one of falling job openings, consistent with a loosening labor market,” added Pantheon Macro.