Dow futures gain altitude for a third session as investors await retail sales and Fed update

This article was originally published on this site

Stocks look poised to climb Wednesday as investors awaited a key reading of consumer sales activity amid the COVID-19 pandemic and a policy update from the Federal Reserve due later this afternoon.

How are equity benchmarks performing?

Futures for the Dow Jones Industrial Average were climbing 153 points, or 0.6%, to reach 28,061, those for the S&P 500 index advanced 21.25 points to 3,415.75, a rise of 0.6%, while Nasdaq-100 futures gained 63 points, or 0.6%, at 11,513.

On Tuesday, the Dow DJIA, +0.00%  rose 2.27 points to finish at 27,995.60, while the S&P 500 SPX, +0.52%  gained 17.66 points, or 0.5%, to trade at 3,401.20, marking its third straight increase. The Nasdaq Composite COMP, +1.20%  finished up 133.67 points, or 1.2%, at 11,190.32, logging back-to-back gains.

What’s driving the market?

Investors are eagerly awaiting the Fed’s first policy statement and updated economic projections under its new flexible inflation target strategy, which allows the central bank to let inflation run above 2% annually, and essentially calls for rates to remain lower for longer.

Market participants are watching to see how the Fed and Chairman Jerome Powell communicate the implementation of its new policy measures, announced last month.

Read:The Fed is ‘fighting the last battle,’ and here are the risks to its new strategy

The Fed will release a policy statement at 2 p.m. Eastern on Wednesday. Powell will hold a press conference a half-hour later, and although no major changes to benchmark interest rates, which stand between 0% and 0.25%, are expected, the market watchers will hope to glean more guidance from the Fed on the state of the economy and the expected pace of the recovery from the deadly pandemic.

The prospect of a prolonged period of support from the Fed has helped to bolster the market since its coronavirus-induced lows but investors are also weighing that support against further delays to a fiscal spending package expected from Congress.

Ahead of the Fed update is a report on retail sales for August, which is due at 8.30 a.m. Eastern, which may also give offer more clarity on the rebound in sentiment and spending by consumers that have been laid low by social-distancing requirements and fears about contraction the coronavirus. That data come after retail sales in China, which is also attempting to recover from the outbreak, showed its first increase in 2020. Retail sales grew rose 0.5% in August from a year earlier, according to data released Tuesday by the China’s National Bureau of Statistic.

The retail sales report in the U.S. also provide the first chance to see the impact of the end of stimulus checks in the U.S. on spending.

Which stocks are in focus?
  • Shares of Southwest Airlines Co. LUV, +1.37%   edged up in premarket trading Wednesday, after the air carrier updated its financial guidance trends, including and upbeat outlook for load factor and reducing its third-quarter outlook for daily cash burn.
  • Unity Software Inc. raised on Wednesday the expected pricing of its initial public offering to $44 to $48 a share from $34 to $42 a share.
  • Facebook Inc. shares FB, +2.35%   were in focus after a report that the Federal Trade Commission is preparing to file an antitrust lawsuit against the social-media giant.
  • Shares of FedEx Corp. FDX, +0.14%  are drawing attention after the delivery and logistics company reported better-than-expected profit and sales for its fiscal 2021 first quarter, saying the world “has accelerated to meet our strategies” and that its workers’ effort had kept “the world’s health care, industrial and at-home supply chains moving despite the challenges of the global pandemic.”