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Wall Street futures are mixed Wednesday ahead of an interest rate policy decision by the U.S. Federal Reserve and new inflation data.
Futures for the Dow fell about 0.1% before the bell and the S&P 500 ticked up 0.2%.
A cooler reading on U.S. inflation on Tuesday buoyed hopes the Federal Reserve will announce that it is skipping an interest rate hike after its meeting Wednesday.
Wall Street’s benchmark S&P 500 index hit a 14-month high after official data Tuesday showed U.S. consumer inflation eased to 4% over a year earlier in May from the previous month’s 4.9%. It was less than half last June’s peak of 9.1% but still double the Fed’s 2% target.
Two Fed board members have said the U.S. central bank should put off a hike while it studies the impact of previous increases.
“The Fed will see this as a window of opportunity to pause,” Clifford Bennett of ACY Securities said in a report.
It is hoped that the U.S. economy can avoid a recession even after the Fed raised its benchmark lending rate to a 16-year high to cool economic activity in a bid to extinguish surging inflation.
Tuesday’s inflation reading prompted traders to increase bets for the Fed to announce no change to interest rates. That would be the first monthly meeting in more than a year without a rate hike, though the expectation is for the Fed to resume raising rates in July even if it holds steady this week.
Previous rate hikes led to a contraction in manufacturing and three high-profile bank failures. Tech and other high-growth stocks are seen as some of the biggest beneficiaries if the Fed eases off rate hikes.
Many investors came into this year predicting a recession would hit in the third quarter, which is two weeks away. Yet a resilient job market has propped up economic activity.
At midday in Europe, the FTSE 100 in London rose 0.5%, the CAC 40 in Paris gained 0.6% and the DAX in Frankfurt advanced 0.9%.
In Asia, the Shanghai Composite Index lost 0.1% to 3,228.98 while the Nikkei 225 in Tokyo rose 1.5% to 33,502.42. The Hang Seng in Hong Kong lost less than 0.6% to 19,408.42.
The Kospi in South Korea was off 0.7% at 2,619.08 and Sydney’s S&P-ASX 200 gained 0.3% to 7,161.70.
India’s Sensex added 0.2% to 63,244.17. New Zealand declined while Singapore and Bangkok advanced.
In energy markets, benchmark U.S. crude rose $1.05 to $70.47 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.30 on Tuesday to $69.42. Brent crude, the price basis for international oil trading, added $1.18 to $75.47 per barrel in London. It gained $2.45 the previous session to $74.29.
The dollar declined to 140.02 yen from Tuesday’s 140.29 yen. The euro gained to $1.0807 from $1.0790.
On Tuesday, the S&P 500 rose 0.7%. The Dow gained 0.4% and the Nasdaq composite rallied 0.8%.
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McDonald reported from Beijing; Ott reported from Silver Spring, Md.
